A lump-sum offer with a deadline

Diane runs the pension analyzer on our website, then books a 30-minute introductory conversation. She shares the details of her benefit packet, and we talk through her goals and her family's, along with her 401(k) and company stock.

Her risk profile shows high capacity (a long timeline and solid savings), medium tolerance, and high composure. Our written proposal lays out the pension decision side by side: the survivor options, what each choice means for taxes and for their heirs, whether special tax rules for company stock held in a 401(k) (known as net unrealized appreciation) could apply, and when keeping the pension may be the better choice. It also explains how we're paid and discloses our conflicts of interest. With the trade-offs laid out, the decision is hers. She chooses the lump sum and rolls it over, along with her 401(k).

Since the special tax treatment wouldn't help much in her case, her 401(k), including the company stock, and the lump sum move directly into a rollover IRA that we help her open at an independent qualified custodian. A direct rollover from pre-tax accounts to a pre-tax IRA generally isn't a taxable event. A large position in one company's stock carries more risk than her baseline allows, and since sales inside the IRA aren't taxed, we reduce it at a pace set by her risk profile rather than taxes. The adaptive core of her portfolio responds to market conditions within the ranges we agreed on.