Can I roll a pension lump sum directly into an IRA?
If the plan offers a lump sum and it qualifies as an eligible rollover distribution, you can generally ask the plan to pay it directly to a traditional IRA or another eligible plan. A direct rollover to a traditional IRA is not taxed when it moves and is not subject to mandatory withholding. A rollover to a Roth IRA is different: the taxable amount generally becomes taxable income.
Not every pension payment is eligible. Payments that are part of a series of substantially equal payments over your life or life expectancy, joint lives or life expectancies, or a period of ten years or more are excluded, as are required minimum distributions. The test is the payment arrangement, not simply how often money arrives. If an eligible lump sum is paid to you instead, the taxable portion is subject to mandatory federal withholding, and to defer tax on that whole taxable amount you would need to replace the withheld portion from other money within the rollover period.
Whether a lump sum is offered, and what spousal consent the plan requires first, are set by the plan.
Reviewed by Bay Area Wealth Advisors. Last reviewed 2026-10-04. Educational information only — not individualized financial, tax or legal advice.