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[quote=Anonymous]Do the math on this before moving into the qualitative aspect.  Two (of possibly many) scenarios:

1) You put the 200k into retirement tax free.  This grows at Y rate (typically around 10% for long periods of time).  You pay taxes on withdrawals when your retire.

You put 70k (10%) down payment on the house, pay Z interest rate (which may be tax deductible based on your tax situtation), possibly PMI for a certain number of years.

2) You put 80k into retirement (invested at Y rate as above), take the 120k towards downpayment, and pay taxes immediately on the 120k, likely at a high marginal tax rate.

You pay a lower interest rate than Z (~1%? its typically not as large a difference as one might expect) on a lower principal, no PMI.

Now, check the above scenarios at various time horizons: 5, years, 10 years, 15 years, 20 years, 25 years, 30 years.  20 years is likely the most telling as I assume that is around your target retirement, but I would choose your retirement date as the best data point.  30 years could be useful based on a 3o year mortgage, but seems unlikely you would live there until age 74.

I would be beyond shocked if putting it all into your IRA wasn't the financial prudent thing to do.  The only reason I would consider not doing it would be if you think you are already completely set for retirement (doesn't seem likely on 620k at 44 years old.  You are already IMO at an excellent place to be at your age whatever DCUM tells you, but its not so much that you can ignore the overall implications of this transaction).

Also for completeness, have you considered just keeping the pension?  I bet you are actually making the better move by moving it to your IRA as inflation will likely eviscerate its value, but something to consider.  There are various NPV value calculators of pensions you can use discounted for the time until you retire that you can compare with the 200k payout.

If you have specific scenarios you want run and need help, I'd be happy to help with the math if you are having trouble.[/quote]

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