Financial Learning Center
- 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
Retirement planning is generally viewed as a three-step process.
Step 1 is the projection phase, where you determine how much to save for retirement.
Step 2 is the accumulation phase, where you save and invest for retirement. Depending on how much you've saved for retirement, you may still be in Step 2. Some people must still save even in retirement, so that retirement planning is an ongoing process.
Step 3 is the distribution phase, which is comprised of two interrelated parts:
- Selecting a distribution option
- Taxation of distribution options
Now that you're retiring, you probably thought the decision-making process was over. However, you now have to decide how you would like to withdraw money from your retirement plan(s). Some retirement plans have only one option. Other plans have several annuity options to choose from, as well as a lump-sum distribution option.
Which option is best for you depends on several factors, including your family situation and your ability to manage large sums of money. We'll discuss these options in this section. In many cases, the tax treatment of the retirement distribution does not have to be a controlling factor, because lump-sum distributions can be rolled over to an IRA within 60 days without tax consequences. But the tax consequences should be considered, and you must consider penalty taxes when making your distribution choice.
Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA (Opens in a new Window)/SIPC (Opens in a new Window). UniVest Financial Services is a trade name of UniBank. Infinex and UniBank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of, nor guaranteed or insured by, any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.