GET THE MOST OUT OF YOUR PENSION PLAN

If you're expecting a pension when you retire, your decisions on how it's distributed could have long-term effects on your financial security.

- SANDRA BLOCK

FOR many American workers, a defined benefit pension plan is an artifact that has gone the way of phone booths, cassette tapes and percolator coffee.

But millions of federal and state government workers, teachers, and individuals who work for companies that continue to provide this oncecommon benefit are still eligible for a pension when they retire. There are even signs that pensions are making a minor comeback. In January, IBM discontinued contributions to its employees' 401(k) plans and defrosted a defined benefit plan it froze more than 15 years ago. IBM's move was influenced by favorable market conditions that could compel other companies to thaw out frozen pensions.

While a guaranteed payment for life is a valuable asset, getting the most out of a traditional pension involves more than bidding farewell to your coworkers and waiting for the monthly checks to roll in. You'll need to make several important decisionsmost of them irrevocable-that could affect the financial security of you and, if you're married, your spouse.

LUMP SUM VERSUS ANNUITY PAYMENTS

Many private employers give workers who are eligible for a pension two options: a lump sum or a lifetime annuity payout. Determining the right one for you depends on multiple factors. In addition to determining which option will deliver the most income, you'll want to consider the health of your pension plan, how long you think you'll live, the other assets you have in your portfolio and your risk tolerance.