After a lot of thought, I have decided to go with the Lump Sum option. Will have it moved to my Chevron 401K. After that I will set up an IRA and move my combined 401K and lump sum to the IRA. It was not an easy choice, but the deciding factor was I would rather have control of it than worrying about what new laws may be dreamed up by Congress in the future
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OP, if you are not 59.5 years old and you separated from Chevron after the year in which you turned 55, then your logic for directly transferring your lump sum pension into the Vanguard 401k is well thought out. If you ever needed to make a withdrawal or take early distributions from your retirement account, doing so from the 401k has an advantage in that it won't be subject to the 10% IRS penalty. Be cognizant, though, that any withdrawal from the Vanguard 401k, before or after age 59.5, will have 20% federal tax mandatorily withheld. It's a rule the IRS has on all 401k accounts. If you want to take withdrawals or periodic distributions after age 59.5, your best route would be to transfer all or a portion of your 401k money into an IRA, and take your withdrawals from the IRA. The advantage you'll have is the IRA does not mandate any fixed percentage to be withheld from IRA withdrawals for federal taxes. The default is 10%, but you can elect to have none withheld, if you like. The IRA account has another advantage by providing you many more investment options than the Vanguard 401k, although IRA funds will come at a slight to higher management cost than Vanguard, which offers only a narrow selection of funds while in the Chevron 401k. You can choose to open an IRA at Vanguard or anywhere. Just be cognizant of the tax withholding advantages offered only through an IRA.
Whoop de Frikin do, what you want, a cookie?