He was drawn to ads for a company called Pensions, Annuities & Settlements, LLC (PAS). They seemed to indicate that he could get a pension advance, borrow and get a lump sum of cash.
Darren filled out initial information on the website for the pension advance and a PAS representative called. “The way he explained it to me, it was a loan. They were going to hold a part of my pension as collateral and then they would give me X amount of dollars and then I pay the money back,” Darren said.
He completed the online application with his financial information and was asked to use an online signature system. But he was so eager to get the money that he overlooked details of the pension advance contract and details that he didn’t understand. “It was like a whole bunch of mumbo jumbo. It wasn’t clear what I was signing,” he said.
He even ignored a red flag when a notary in his hometown of Turlock questioned the paperwork. He said that she called PAS for clarification because there apparently was an error in the order of the pages. Darren recalls her saying, “This doesn’t look right.”
Nevertheless, Darren agreed to the deal and soon discovered that a $600 fee was deducted from the $5,000. He began making payments of $415 a month and six months later he heard from the IRS. It considered the money an early pension withdrawal and asked him to pay tax on the money.
He said, “If I knew that what they were doing, that this was an early withdrawal from my retirement, I would never have gotten it.” He was so upset that he decided to find out if he could pay off the loan immediately.