a c h i e v i n g y o u r r e t i r e m e n t g o a l s your m a y m e a n c h a n g i n g focus.
Regardless of what your retirement goals may be, you’ll need income to support them. Most retirement plans are designed to help you accumulate assets – not generate income. So when you get close to retiring, you may need to change your focus from accumulation to income – and make some decisions about how to ensure that your retirement assets last a lifetime.
You have options:
Take the money as a lump sum. This will trigger income taxes and a 10% federal income tax penalty if you’re not yet age 59½ and have not met any exceptions.
Roll it into an Individual Retirement Account (IRA). An IRA rollover allows you to transfer money from a qualified plan to an IRA without incurring current income taxes. It may also offer you more flexibility and control than other distribution options.*
Leave it with your old employer. You may lose some control and access to those assets and may not be allowed to make additional contributions.
Transfer some and take the remainder in cash. You will end up paying some taxes on the amount you take in cash (and penalties if you’re not yet age 59½).
Roll it into a new employer’s retirement plan. You may be able to do this if you’re starting a new job and are eligible to participate in a new retirement plan, provided your new employer’s plan accepts such rollovers.
Tax results may vary depending on such factors as: the Federal and State(s)’ income tax rates that may apply to you.
However, if the rollover from the qualified retirement (other than an IRA) is not a direct rollover (i.e. trustee-to-trustee transfer), the distribution will generally
be subject to a mandatory 20% federal income tax withholding requirement (and may be subject to state income tax withholding also).