I am 30 years old. I have an old pension account with a previous employer that has about $5,000 in it. I have the option to roll it over, leave it, or take a full distribution. What would the taxes look like if I were to take a full distribution of the $5,000 at my age?
I would recommend either leaving the pension where it is (depending on the available investments) or rolling over the account to an IRA. That $5,000 invested today could grow to around $200,000 in 37 years (full retirement age) if it earned 10.49%.
If you decide to take the distribution, it will be subject to your marginal income tax rate plus an additional 10% early withdraw penalty for being under 59 1/2.
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Answered by: David S. Markle, CPA, is a financial planner with Markle Wealth Management in Danielsville, Pa.