To Collect Pension From Former Employer contact your former employer and request a distribution form for receiving your pension fund.
Lost a job years ago but didn’t collect the pension? Or just lost a job but not sure how to collect your pension?
Don’t worry. I am here to help. Because in this post I am providing an in-depth guide on how to collect pension from former employer. Moreover, I am also going to answer related questions like How to look up your pension, How do I find my pension from years ago and many more. So, stay tuned.
What happens to Vested Pension When you Leave a Company?
When you leave a company and your pension plan is vested then the pension benefits belong to you. However, how to get hold of the pension plan depends on the pension type.
In case you had a defined contribution plan, such as a 401(k) or Money Purchase pension, the money in your account belongs to you. You can either roll it over into an individual retirement account (IRA) or transfer it to your new employer’s retirement plan.
On the other hand, If you have a defined benefit plan, such as a traditional pension plan, your can request your employer for a distribution plan. So, when you leave the company, you might be able to receive a lump-sum distribution of your vested benefits. Alternatively, you can even choose to receive a monthly pension payment when you reach retirement age.
Can I Cash In My Pension If I No Longer Work For The Company?
Yes, you can cash in your pension if you no longer work for the company. However, how you can cash in will depend on certain factors like the type of your pension or how vested your pension plan is, and the company policy.
Currently, there are two types of pension plan
- Defined Contribution Pension
- Defined Benefit Pension
If you are living in the US, you’ll most probably have any of these two pension plans. Among these, defined benefit plans are the old and rare ones
However, you can cash out from both of the pension plans if you no longer work for the company.
In the case of the Defined Contribution Pension plan, if you withdraw, you have to be more than 59 1/2 years old. Moreover, if you cash out early, there will be a 10% penalty for withdrawing early.
On the other hand, if you are in a Defined Benefit Pension. you can cash in your contributions and some contributions from your employer too. However, how much you will get will depend on how vested your pension plan is and the company policy. But what if you did not take it? How to track down your pension from a past job?
How to Find a Lost Pension Plan
If you have lost track of your pension from a past job, these two things can be the easiest and cost effective solution to track it.
Check your old paperwork
Look through your old employment contracts, benefit statements, and tax returns. It can provide valuable insight. Use the details you find to track down your lost pension.
Search the Pension Benefit Guaranty Corporation Database
The PBGC is a federal agency that guarantees certain pension benefits in case the pension plan can’t pay them. You can search their database online to see if your past employer’s plan is listed.
Now it’s time to find out how to collect a pension from a former employer
How To Collect Pension From Former Employer
If you are trying to collect a pension from a former employer then you most probably had a defined pension plan. Because Defined Contribution pensions are portable. So, I’ll be talking about collecting a defined benefit pension plan.
Here are some effective ways of collecting a pension from a former employer in case you left the job a while back
- Your First task is to find your old employer’s contact info and consult them.
- After that, you should ask the HR of your former company about their pension policy.
- Also, find out details about how vested your old pension plan is and what are your options.
- Then you should find out whether your pension has been moved to an IRA or it’s still in the company account.
- In case, your pension is moved to an IRA then find out which company is holding it currently. Contact them to ask about the procedure of collecting the pension and follow the procedure for collecting your old pension.
- On the other hand, if your pension is still in the company account then discuss with your employer the distribution form for receiving your pension fund and collecting your pension.
No matter where your old pension fund is, you will have two options.
- Collect the pension fund as a lump sum
- Wait until you retire and receive the fund as retirement benefits.
Now if you choose the first option and you are less than 59 years then you will face a penalty.
On the other hand, if you just left your job and want to collect a pension from your employer then you have the below options. They are
Cash out pension when leaving job
You can talk to your HR about the pension policy, how vested your pension plan is, and other details. Then request your employer to give your pension money as a lump sum according to the company policy.
If you receive your pension as a lump sum then you have to report it as income and pay taxes. Moreover, if you want to put it into a new pension scheme then you have to do it within 60 days of receiving the fund.
Roll your Assets into an Individual Retirement Account
It’s a common practice when leaving a job. To do this you need to
- Consult with your employer and tell them your plan
- Choose an IRA provider and the type of IRA.
- Open the IRA account.
- Request a direct rollover
- Choose your investments
Transfer Pension from Previous Employer to New
Your last option is to not receive a lump sum. Instead, you can request your employer to transfer the funds from your former pension account to your new employer’s pension fund.
By following this you can avoid being taxed on your pension.
Follow this IRS Retirement webpage to find out more about your options. Furthermore, if you are thinking about taking a lump sum then please consult with a financial advisor or tax attorney.
But what if you lost your former employer’s contact?
How Do I Find My Pension From Years Ago
If you did not take your pension benefits from years ago. Then follow the below
- Find out your old employer. If you don’t find them then look at whether the company was merged or not. Then contact the new management.
- In case the first method did not work then look into the department of labor website. You might find your old employer there.
- If any of the above methods did not work then look at your old bank statement and find out your former employer’s account details. Then contact the bank with the details.
- You can also look on the National Registry of Unclaimed Retirement Benefits website.
- Lastly, you can contact your old colleagues to find out about your employer.
After finding your former employer, follow the above-mentioned method for collecting your pension.
Now let’s find out how to look up your pension.
How to look up your pension
To look up your pension, you need to get access to your pension statement. Because your pension statement provides information about the value of your pension, the contributions you and your employer have made, and the benefits you have accrued.
To view your pension statement, you will need to search on the pension benefit guaranty corporation website.
However, to search on the PBGC you need to find out about your pension plan or account name. Contact your HR or previous employer to find out your pension plan details then search on the PBGC website.
How to Collect Pension Early
Collecting a pension early is not recommended. As you will be subject to tax penalties and reduced benefits. However, if you must need it here are some things you need to do
Check if your pension plan allows early retirement
Some pension plans offer early retirement benefits while some don’t. Most defined contribution plans allow it. So, if you have one then you are in luck. Now, Review the summary plan description or contact the pension plan administrator to find out your options.
Consult With A Pension Expert
It’s important to understand that taking your pension benefits early may result in many complications. It’s important to consult with a financial advisor or pension expert to understand the implications of your decision.
Moreover, they will guide you through your next options depending on your pension plan.
Make A Distribution Plan
Depending on the terms of your pension plan, choose a distribution plan that suits you. As you are taking an early pension so you must be in need of cash. As a result, the lump-sum distribution might be most suitable for you.
This option allows you to receive a one-time payment of the present value of your pension benefit. You can use it to fund your retirement or invest as you see fit.
On the other hand, if you see other options like monthly benefit fit then you should choose it.
However, do not forget about tax.
Explore Disability Retirement
In case you have faced a severe health issue or become disabled and are unable to work, you may be eligible for disability retirement benefits. These benefits may allow you to collect your pension before the normal retirement age without a reduction in benefits.
So, if you are eligible for it then use it to your advantage.
Collecting your pension from a former employer may seem like a hassle. However, that pension money is your right and you must collect it by simply contacting your employer.
Lastly, in case your former employer refuses to provide any detail of your pension fund then contact a lawyer immediately. Moreover, you should consult a financial advisor to properly manage your pension fund.