Can I transfer my retirement's cash-out option to an IRA so I don't have to pay tax on that amount?

I want to take the lumpsum cash out from my retirement and live off the interest by investing it in an IRA.Is the amount going to be taxable when I transfer it to IRA or 401(K)?|||Whether you can reinvest the lump sum depends on the type of retirement plan you have. If it is a "qualified plan" like a 401k or 403b, or one of a few other types, it can be rolled over to an IRA. If you are allowed a rollover, taxes on the lump sum will be deferred until you withdraw from the rollover account.





However there are lump sums that cannot be rolled into an IRA or an existing 401k, because of the type of retirement plan. Before you take the lump sum you should consult with the plan administrators to see what options are available.|||You can roll it over into an IRA and not pay tax on the withdrawal of the lump sum. You'll pay tax each year though on whatever you take out to live on.|||The best person to address this question is your plan administrator.





But generally, the answer is yes, because the lump sum is actually your immediate payout from accumulated pension benefits built up during your employment.





If the above is the case, then you should not be taxed on the move, which is called a rollover.





However, you will be taxed on any money you take out of the IRA in the future.|||What type of retirement account are you taking it out of?|||I'm not sure I understand the question...Here are your options...





*Transfer entire balance to an IRA deferring the taxes. You can withdrawal money from the IRA but you will be taxed and possibly penalized on what you take out.


*Transfer entire balance to a new 401k and possible take a loan to live off of.


*Transfer part of it to IRA and cash out part of it. There will be 20% withholding as down payment on fed income taxes and 10% penalty on the portion you withdraw.


* Cash it all out incurring 10% penalty and 20% withholding upfront.