how to model deferred lump sum pension?

I have a Cash Balance Plan defined benefit pension. It's defined contribution by the employer while employed, then the balance is available to me as a defined benefit at retirement. The cash balance can be used to purchase an annuity or taken as a lump sum and rolled over to an IRA. (I also could take it as a lump sum and pay income taxes on it, if I wished.)

I currently have it modeled as a lump sum rollover by setting my last year's employer retirement match as the amount I'd normally get as my match, plus the balance of that cash balance plan.

I'd like to determine the benefit of leaving it with the employer and taking it at some point in the future. How do I do that if I can't record an employer contribution after my retirement date?

Can I set the age at last contribution later than my retirement? FWIW, I don't have to set my first smooth withdrawal to coincide with my retirement because I'm dependent on large special withdrawals in the first few years, to support me while deferring social security.

Alternatively, what are the ramifications of setting my retirement date later than I actually plan to retire, to enable a late employer retirement contribution? I don't plan to start smooth withdrawals until age 70, which is the time I intend to start social security and take the cash balance plan as a lump sum.

Contributions from other users are appreciated.



Hi Chris,

You can set the "age of last contribution" to after your retirement. Play around with this and you should be able to adjust it as you like. This has worked fine in my experience.

I haven't tried to change the retire date to several years after actual retirement, but think it could be done. If you don't have income in the interim years (between actual retirement and retire date) it shouldn't impact anything as taxes, SS, returns, etc. are based on what income and assets are available in any given year. Since you aren't inputting any new income (except for possibly your final year), it should be okay. I'd have to experiment to know for certain.

I'd set up a few profiles and experiment with each to see what works best for you.


dan royer's picture

Agree with Brian. I believe you can set the age contribution after your retirement date.

Following up, setting the age of last contribution to after the age of first smooth withdrawal is allowed, and permits an employer contribution at a late age. I have to calculate the expected future value of the rollover, but it works.

The only negative side is that ESP then wants to insure my life until that happens when, in fact, it's not necessary since it's an inheritable asset. It's just off the books. Another reason to give users control of life insurance to mitigate the effects of insurance expenses we won't really incur.


dan royer's picture

I have been pushing for some programming changes with regard to how insurance cost is calculated so the user has more control.

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