Rolling pension funds into a traditional IRA

[dlessmann]

I began receiving money from a previous employer’s pension fund in 2019. The payments began in August 2019. I understand this is taxable income on my 2019 tax return. However, in doing my taxes I discovered that I could have avoided tax on this income by rolling it into my IRA. I have some questions around this topic.

• The pension fund pays me a set amount on a monthly basis. Can I deposit this money into a traditional rollover IRA account, (created when I left this employer) to defer paying federal and state taxes until I start using this money?
• Note: I have a 401k with my current employer, and I contribute the maximum amount allowable every year.
• Note: The reason I started receiving my pension now is based on an illustration from my previous employer which showed it was advantageous for me to begin withdrawals now (at age 63) rather than waiting to age 65.

[ColeenD3 · Accepted solution]

 No.  The monthly pension benefit you’ll receive is considered taxable income. Those monthly payments can’t be sheltered from taxes by rolling the payment into an IRA.

Also please see this LINK for more information.