55-percent cuts in 2018 'in the face of the continuing practice of lump sum
Legislative provisions will be made to enable lump sums
to be paid from 11 April 2016.
The new tables show that people are living longer, so when the IRS incorporates them, it will increase the cost of lump sums
The report reveals that 55 percent of the workers who opted to receive a lump sum
distribution from their employer-sponsored 401(k) plan rolled their money directly into a tax-qualified account.
The punitive 55% tax charge that currently applies to lump sum
death benefits paid from drawdown arrangements will be abolished altogether.
There was talk of 'the second death of annuities' following the announcement; however, annuities with lump sum
death benefits, such as value-protected annuities, will benefit from the changes.
In a paper, "The Illusion of Wealth and Its Reversal," researchers Daniel Goldstein, Hal Hershfield and Shlomo Benartzi attempt to answer the question, "Why do people more often choose the lump sum
option instead of the annuity?
These lump sums
are at the discretion of the President," he stressed.
Mr Webb said that as four-fifths of people already take a tax-free lump sum
when they retire, giving them early access to the money wouldn't have a major effect on pension income.
Someone who invested pounds 50 a month into the average investment trust during the year to the end of April would have seen the value of their holding fall by seven per cent to pounds 558, considerably better than the 30 per cent loss to pounds 419 suffered by someone who invested a lump sum
of pounds 600 in April 2008.
People who are interested primarily in reducing VA's workload and reducing government spending with total restrictions on reopening claims and deeply discounted lump sums
have seen this as an attractive and easy way to do that," Violante said.
Unfortunately, this withdrawal of tax-free lump sums
and continuing to make contributions is now a contentious area, under new rules brought in recently with A-Day.