Receiving Income in Retirement
As retirement approaches, it's important to understand the options for receiving your money before you leave your job. Fortunately, several options are available so you can select the option that's best for you.
No one said you have to take your money when you're ready to retire. If you're in a good position and can let your money stay and possibly grow, you can stay put! Your money can potentially continue to grow until you're required to take a distribution at age 70½.
Of course, investing involves market risk, including possible loss of the money invested. But, as we have throughout your participation in the Plan, your Retirement Specialist will help you understand your options on how to deal with and adjust for market risk through retirement.
Getting paid in retirement
If you're ready to start withdrawing your money, choose the option that's right for you. Options through your plan may vary, so please contact us to review the options available to you.
- Systematic withdrawal – This option allows your investments to stay active while you receive regular payments. You have two payment options:
- Receive a fixed amount at the frequency you select (monthly, quarterly, semi-annually, or annually) until your account balance reaches zero.
- Choose how long and how frequently (monthly, quarterly, semi-annually, or annually) you would like to be paid – payment amounts will vary based on the performance of your investments and will continue until your account balance reaches zero.
You can continue to manage and change your investment options while receiving systematic withdrawals. Since market risk is involved, you may not be paid as much or as long as you originally expected, depending on the performance of your investments.
- Lump Sum – With a lump sum withdrawal you receive the entire balance of your account, and the account is closed. Unless the money is rolled over into another qualifying plan within 60 days of receipt, it will be taxed based on your tax bracket. Keep in mind that receiving a lump sum may push you into a higher tax bracket.
- Partial Lump Sum – With a partial lump sum withdrawal, you can withdraw part of your account balance as a lump sum, and leave the remainder in your account. Again, your money can stay in your account, regardless of your employment status.
- Fixed annuity – An annuity is a contract issued by an insurance company. When you purchase an annuity, you can decide whether to be paid monthly, quarterly, semi-annually, or annually. All annuities are not the same, so it's important to learn the differences. For example, some annuities allow beneficiaries, and some do not.
Distributions made prior to 59½ may be subject to a 10 percent penalty tax. All taxable distributions at any age are subject to ordinary income tax, and surrender charges may apply.
Get the help you need
Talk with one of our Retirement Specialists if you have questions about receiving your money in retirement. Retirement Specialists may not offer tax or legal advice. You should consult your own counsel before making any decisions about plan withdrawals.