I have a pension with a former employer that will pay out around $1000/mo when I turn 65. They are offering a lump-sum payment now of ~65,000. I did the math and it makes sense from a rate-of-return standpoint to take the lump sum and invest it myself.
I believe I can roll it into an IRA and avoid any taxes. But if I don't, will it be taxed as a pension distribution? This is kind of like ordinary income, but I live in Illinois, which does not tax pension distributions. So if I don't roll it into an IRA, will I get it tax free?
The reason for not putting it into an IRA would be to fund a business investment about a year from now.