Distributions from Your Retirement Plan
- Introduction
- What Initiates a Distribution?
- Five Dates You Should Know
- Selecting a Distribution Option
- Deciding on a Payout Option
- Annuity Form of Payout
- Advantages and Disadvantages of Taking an Annuity
- Taking a Lump-Sum Distribution: Know Your Options
- Annuity vs. Managing Your Own Retirement Assets
- Advantages and Disadvantages of a Lump-Sum Distribution
- The Roth IRA–How Does It Fit In?
- Making the Decision: Annuity or Lump-Sum?
- Taxation of Distribution Options
- Rollover into a Traditional IRA
- Advantages and Disadvantages of Rollover to a Traditional IRA
- Annuity Payouts
- Early Distributions
- Should You Defer Your Retirement Plan Distribution as Long as Possible?
- Distributions Following Death
Advantages and Disadvantages of a Lump-Sum Distribution
Advantages:
- You can roll the money into a traditional IRA within 60 days and continue to defer income taxes.
- You may convert the traditional IRA to a Roth IRA and enjoy tax-free growth and distributions (however there are potential taxes due from conversion).
- You have your money in hand and thus don't run the risk of dying prematurely and losing all of your future annuity payments.
Disadvantages:
- You have to actively manage your pension amount.
- There is a large up-front cash drain to pay income taxes on the entire distribution if it is not rolled over to a traditional IRA or other eligible plan.
- Depending on how the money is invested, future earnings on the amount distributed may be fully taxable.
- Distribution may be subject to the claims of creditors in the event of personal bankruptcy, even if rolled over to an IRA.
IMPORTANT NOTE: When you leave your job, one decision to make is whether the investment managers or investment opportunities through your employer pension plan are better than those available to you through an IRA rollover. Keep in mind that the investment management of your prior employer's pension plan may change, so monitor your investment performance to make sure your investments are still meeting your objectives.
Share Article:
IT IS IMPORTANT that our customers understand that products and services made available through Osaic Institutions, Inc.
Important information about procedures for opening a new account
To help the government fight the funding of Terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.
What this means to you: When you open an account, we will ask you for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.
Investment products are offered through Osaic Institutions, Inc., Member FINRA/SIPC. Insurance products offered through Osaic Institutions, Inc.
- ARE NOT A DEPOSIT
- ARE NOT FDIC-INSURED
- ARE NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
- ARE NOT GUARANTEED BY THE BANK
- MAY GO DOWN IN VALUE
Important information about procedures for opening a new account
To help the government fight the funding of Terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.
What this means to you: When you open an account, we will ask you for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.
Investment products are offered through Osaic Institutions, Inc., Member FINRA/SIPC. Insurance products offered through Osaic Institutions, Inc.