Leaving a job doesn't necessarily mean you must close your pension account, but it's a quick method to get your money out in one lump sum. If you take out any money before retirement, you are going to have to pay fees and taxes associated with the account closure. The company that services the pension immediately takes out a portion of the money, and then you must pay taxes on the entire amount by the yearly tax deadline.
1. Speak to the Human Resources personnel at your office to discuss your job termination. Some companies like to do an exit interview and have you sign papers. Ask for your pension records if you did not keep track of your monthly statements. Most likely, your company has a financial institution manage the pension accounts.
2. Call the company that manages your office's pension plans. Ask about the fees associated with closing a pension account. There may be ways to avoid them, especially if you roll over your balance into a new account.
3. Ask the company representative to close your account and send you the total amount as a check. Some pension-plan administrators ask you to wait until you have been separated from your job for a certain amount of time.
4. Wait to receive a check in the mail from the pension-servicing company. The check should be written for the balance in your account on the day you closed it, minus any fees. You will also receive a statement from the company that details your account activity.
5. Report the pension money as income on your tax forms. You might have to pay as much as 10 percent of your pension balance in taxes.
- Some financial institutions do not charge fees if you close your account during a rollover period.
- Keith Brofsky/Photodisc/Getty Images