If you are a G-4, green card holder, or US citizen retiring from an international organization, there are some great tax planning opportunities available to you. This is true whether you take a lump sum or an annuity. But you usually need to take certain actions in your year of retirement to capture those tax savings.
When deciding whether to take a lump sum or an annuity (or a combination), there are many factors to consider. First, which pension do you have? Some international organization employees participate in a gross plan. Some are in a “net” plan. Some are defined-benefit plans. Some are defined-contribution or cash-balance plans. And the tax treatment depends on whether you were a G-4, green card holder, or US citizen during your employment.
And many other factors come into play. What are your cash flow needs during retirement? Do you hope to spend your pension or pass on wealth to your heirs? What other income (separation pay, vacation payout, etc.) do you anticipate in your year of retirement?
We help employees nearing retirement understand the pension options available to them. And we work with them to identify the right solution for their situation and the actions they can take to minimize their taxes.