Tag: lump-sum

Hand holding coins in birds nest.

Abstract The transition from defined benefit (DB) to defined contribution (DC) pension plans has left workers forced to make choices that may decrease their financial resources in retirement: taking lump-sum distributions before retirement that divert funds that could support consumption in retirement, not annuitizing DC benefits, or choosing a single-life annuity over a joint-and-survivor option…

Senior man calculating finances

Abstract This paper provides new evidence on how public policies affect individuals’ disposition of pre-retirement lump-sum distributions (LSDs) from pensions. The policies, enacted in the 1980s and 1990s, include changes in tax rates, penalties, withholding rules, and default options. Using data from the Health and Retirement Study, we find that each set of policies influenc…