I guess hard to tell and of course it depends;a DBP is a traditional pension paying you a certain amount of money when you retire.Depending on how your pension is structured, your benefits are either fully / partially taxable when you start making withdrawals. Your pension benefits are fully taxable if you didn't put in any of your own money, if your ERdidn't withhold contributions from your pay or if you received all your contributions tax-free in previous years. If your pension plan allowed you to contribute after-tax dollars, you won't pay any tax on the part of your benefits that represents a return of your initial investment. So in general,, you'll also have to pay a 10 % early withdrawal penalty if receiving any pension benefits before you turn 59 1/2. When you're ready to move your pension money to an IRA, you'll have the option of a direct or indirect rollover. A direct rollover means that your plan administrator / trustee transfers the money to your IRA for you. Typically, when you take money out of your pension the plan administrator should withhold 20 % for federal taxes . but the biggest benefit of requesting a direct rollover is that the 20 % withholding doesn't apply when the money is transferred from one trustee to another trustee. You also won't have to worry about the early withdrawal penalty since no part of the money is considered a distribution;however,If your plan doesn't allow direct rollovers, you may still transfer your defined benefits pension money to an IRA by yourself. When you do an indirect rollover, the plan administrator sends the money to you directly. The 20 % federal withholding applies unless you ask for the check to be made out to the IRA that you're planning to deposit the money into. If the 20 % is withheld, you'll have to make up the difference when you roll your pension over. Otherwise, the IRS will count it as taxable income and the 10 % early withdrawal penalty may apply.If you're doing an indirect rollover, you'll have 60 days to deposit the money into your IRA. If you don't, the IRS will consider it to be a distribution and you'll have to pay tax on the whole amount. your state may also require you to pay taxes on this income.
Some pension plans require you to start taking minimum distributions from your account when you turn 70 1/2, even if you're still working. These types of distributions can't be rolled over into an IRA to defer taxes. You'll also have to decide if you want to roll your benefits over to a traditional or R- IRA. A traditional IRA lets you deduct your contributions but your benefits are taxable when you start making withdrawals. You don't get a tax write-off for putting money in a R-IRA but qualified withdrawals are tax-free