Employer Pension Terminated - What To Do With Distributions?
I'm still working but my employer froze the employee pension program over ten years ago (no new participants) and moved everyone over to a defined contribution (401k) program. I am fully vested in the pension program.
Our pension program will be terminated and I have three options with respect to what I've earned.
Company can buy me an annuity or
I can rollover the pension assets directly into my existing 401K or
The office will directly transfer my pension assets (pre and post-tax $$$) to my brokerage where I have both an IRA rollover and Roth IRA.
I've opted for option 3 and am thinking I can deposit the check funded with pre-tax dollars and earnings directly into a new rollover IRA account (keeps the accounting clean and I won't comingle this money with an existing rollover account - I'm thinking for doing a Roth conversion with this pot of money downline. Separately, I will deposit the post-tax dollar distribution check directly into an existing Roth.
Has anyone ever done this before? Does it make sense? If I were to do a Roth conversion with the pre-tax distribution is it as simple as paying taxes on the value of this distribution or do I have to factor in my existing rollover IRA assets when doing the math?
I'd appreciate any thoughts, especially from someone who might have executed this before. Thanks.