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“Just because you can take money, doesn’t mean you
should.” |
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At age 59 1/2, you get the green light to take savings from your
employer-sponsored plan without penalty. Before you turn all frisky
and decide to blow the whole thing on that lake house you’ve
always wanted, let’s take a step back and assess.
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Consider this:
1. You will pay income tax on any money you receive from employer-sponsored
savings.
2. You are not required to take plan distributions until age 70 1/2.
3. If you and/or your spouse are still working, you may not yet need
income from this source.
4. Experts suggest that retirees spend taxable savings first, and
employer-sponsored-plan savings last. (That’s because employer-sponsored
plans may accumulate more when not taking annual income-tax hits.)
Okay, now that the euphoria of spending your multi-digit account
balance has worn off, let’s talk options. Every plan is a little
different, so check with your Benefits department about your distribution
options at Retirement. You may be able to:
• Take a lump
sum
• Stay in plan
• Roll over to
an IRA
• Roll over to
an annuity
• Begin distributions
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“No do-overs.”
Once distributions begin, you can’t go back
to saving in the same account. So, be absolutely sure you’re
happy with your decision.
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