I actually was surprised to get letters from 2 former employers when I turned 55. I had vested with both (7 yrs with each of them) and had modest 401k accts, so I thought that was all there was. We were recovering from a personal bankruptcy so I had never been able to save much in personal contributions. However, both employers purchase annuities for employees that are vested. Now, annuities by definition mean that you are dependent on the life insurance company holding that annuity to stay in business! My FIL, for example, worked for Mead Paper Corp. for decades, and lost his entire pension when Mead was purchased and the insurance company subsequently went bankrupt. So I'm not counting absolutely on them, but it's a nice little "boost" if it comes to me. My husband is a state employee and his pension is pretty safe. The agency agreed, at the last union contract, to start funding the pension obligations at a rate double what they were doing before. This will put them as one of the few public agencies to be on a sound basis, actuarially speaking, for their retired workers. His 401k is with PERS, the largest pension fund in the US. An extremely well managed, influential, and progressive pension fund, it is also one of the very few government funds at any level to completely forbid any financial contributions of any sort being accepted by the treasury managers. If you want to know why that's important, you can see the current issue of Forbes magazine for a very enlightening article on how North Carolina's pension manager pays high fund fees, receives substantial contributions from fund companies, yet produces extremely poor investment results for the state employees.

Sue - That would be the best scenario if we could take/roll-over a lump sum tax-free/deferred, but there was no mention of anything like that in the paperwork we received. Well that is something that they would not have to disclose to you, imho. If they hand the distribution to you, it is entirely up to you what you want to do with it. The safest way would be to have an account set up (like a new IRA) and have the funds moved directly into the account, as opposed to you receiving the money and then you putting the $$ into the IRA. If they mail you the lump sum, they are required to withhold the tax on it. If it is rolled over into a qualified IRA account, then no taxes would be withheld at that time on the entire $21K, but would instead be taxed upon withdrawal, when you became 'withdrawal' age. It sounds like you are all familiar with all the above though..sorry if I was preaching to the choir. Good luck! Keep us posted please. Sue Here is a link that might be useful: 401k and Pension Lump-Sum Rollover Assistance

I'd say that buying stock is like buying ownership of a company's booster club. Stocks go up and down based upon the changing human emotions of the investing public concerning the given company, not actual results. The shares of troubled companies can rise, and those of successful companies fall. The old cliche is that market prices are driven only by greed and fear. Dividend reinvestment plans are just like dollar cost averaging, they are non-strategy "strategies" created in the interest of financial advisers and brokers, not the investors themselves. Outside of a retirement plan, you need to come up with cash from other sources to pay tax on the dividend. How much sense does that make as a strategy? You do know that brokerage firms and advisers usually receive payments from fund advisers (or customers) based upon account balances. Why distribute a dividend to the customer, when you can retain the funds and have a bigger base for payments? Or, in the case of direct stock holdings, the dividend paying company can avoid paying out the dividend and just keep the cash. Issuing more shares is free. Oh, I have an idea, let's call doing that a Dividend Reinvestment Plan. Like it or not, that's where this "strategy" came from. Tech stocks are volatile, there's no take-away lesson to be learned from that fact. Do as you like, keep your eyes open. Good luck.

Interesting discussion--especially since my DH just retired this past Thursday (at age 62). From what I've seen, yes, the set up can vary from company to company. Dsis worked for a company that went out of business (it was actually bought up and bankrupted by a very large national company so they could take a tax loss). She was in her 40s when that happened, had worked there since she was 17. Thanks to a class action suit, she got a one-time payout of about $16,000 in lieu of the pension she should have gotten (she was in management, at one point she was the highest placed woman in the entire company). So she gets no pension from them. She works at the Post office now. And will get only 1% of her salary for each year she's worked there. Since she's only going to be able to put in 10-15 years before retirement age, that's going to be next to nothing. Daunt, on the other hand, worked for a company that ended up going belly-up, too. It changed hands a few times before that happened. In her case, each 'company' she worked for (even though she held the same job, management just changed every few years) took out an annuity for her. She ended up with 4 of them. 3 died with her, one was bequeathable--so I'll be receiving $100 a month for the rest of MY life (since I doubt I'll make it to 2042) and can bequeath it to someone of my choosing. Now, DH is getting the standard, old-fashioned company pension. He contributed nothing to it--it was part of his salary/benefits. There were 4 tiers--one where he'd get a larger amount, but I'd get nothing if he died before me. Then there were 3 choices where he'd take a lower amount, and I'd get something after he died. I think we decided upon the 75% option (I get 75% of his pension, if I'm left behind). Of course, we have to see exactly what the final #'s are from his pension and SS, but it looks as if, between his SS, mine, my annuity and his pension, we'll be making the same amount with him retired, as he was making working! Does't pay for him to keep working! (and spending close to $100/week to commute). As I understand it, there are regulations that insure that the money is appropriately invested and secure. DH's company is one that has traditionally had their pentions OVERfunded--which is fortunate. Yes, it's a bit of a gamble that the company takes--like insurance. When their former employees (or their spouses) live long lives, they take a bit more of a hit than if they die young, but that's the deal. And I'm sure the numbers still work out in the company's favor. The sad, sad thing is that our children won't get to collect pensions. Most of them will have to continue working until they physically cannot get out of bed in the morning. It's a shame.