Lump Sum Payment
A “Lump Sum” is a one-time payment of money, as opposed to a series of payments. You can choose to withdraw all of the money in your individual account or you can choose to withdraw only a portion of the money. If you withdraw only a part of your account, you can apply for another part under the Retirement or Disability provisions of the Plan at any time. Subsequent withdrawals do not have to be lump sum payments.
If you choose to receive only a portion of your SIS Pension Fund account when you elect to receive a benefit under the Separation from Employment provision of the Plan, you cannot apply for an additional withdrawal under this provision of the Plan during the 12 months after you receive a distribution.
Married individuals – In the application process, your spouse must agree to give up the 50% survivor annuity benefit in order to receive a lump sum benefit.
A Lump Sum payment can be paid directly to you or, if you wish, directly to your Individual Retirement Arrangement, (IRA). When SIS Pension money is sent to an individual’s IRA, it is called a “rollover”. Money in your SIS Pension account is not taxed until you receive it. When your SIS Pension money is paid directly to you, it is taxable in the year you receive it, unless you then roll it into an IRA. The SIS Pension Plan will withhold 20% against any federal income tax you will own on a Lump Sum paid directly to you. If you instead roll your Lump Sum directly into an IRA, no tax withholding applies. Money you receive from the SIS Pension Fund is taxable as ordinary income. You may owe more tax or less tax on your Lump Sum payment(s) depending on your tax bracket. This gets worked out when you file your quarterly or annual tax filing.
Investopedia – Individual Retirement Arrangement (IRA)