When you retire, the assets you’ve accumulated in your 401(k) can become an important source of regular income. You have several choices for taking that income, ranging from a lump-sum withdrawal to regular monthly distributions from your 401(k) account. So it’s important to have a strategy in place when you make your selection.
In most cases, if you leave your money in your 401(k), you start taking the income as soon as you retire. But you may also decide to roll over your assets to an IRA. With a traditional IRA, you can postpone required withdrawals until you turn 70 ½ if you prefer. With a Roth IRA, no withdrawals are required.
Your company may be able to cut you a regular check based on a pre-determined annual withdrawal rate from your 401(k) balance—say 4 percent. This can help you manage retirement income. A steady 401(k) "paycheck" can help you avoid withdrawing too much money too early, which in turn helps reduce the risk of outliving your retirement savings. Ask your employer if this is something they, or their 401(k) plan administrator, may offer. |
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