His Company Offered $4,100 a Month for Life or $812,000 Today. He Took the Pile, Rolled It Into an IRA, and the IRS Didn’t See a Dollar Until He Decided It Should.

Facing a choice between a monthly pension check or a lump sum payout, one retiree chose the large sum and rolled it into a traditional IRA. The IRS did not collect any taxes until the retiree decided when to start withdrawing the funds. The direct trustee-to-trustee rollover allowed the full $812,000 to enter the IRA without any withholding, avoiding the typical 20% federal withholding and immediate tax bill.

This strategy enables retirees with over $1 million saved to defer taxes until they begin taking withdrawals, giving them control over the timing and potential to invest the lump sum in tax-advantaged accounts like IRAs, Roth conversions, or other investments that may generate income during retirement.