Receiving Income in Retirement
As retirement approaches, it’s important to understand the options for receiving your money before you leave your job. Fortunately, several options are available so you can select the option that’s best for you.
No one said you have to start taking your money when you’re ready to retire. If you’re in a good position and can let your money stay and possibly grow, you can stay put! You’re required to take a distribution at age 70½ but even after that your money may potentially continue to grow. Of course, investing involves market risk, including possible loss of the money invested. If you have questions about how to handle your account, your Team MSRP Retirement Specialist can help you understand how to prepare for market risk through retirement.
Getting paid in retirement
If you’re ready to start withdrawing your money, choose the options that are right for you. Remember, withdrawals are taxable income to you in the year the payments are made.
Systematic withdrawal – This option allows your investments to stay active while you receive regular payments. You have two payment options:
- Receive a fixed amount at the frequency you select (monthly, quarterly, semi-annually or annually) until your account balance reaches zero.
- Choose how long and how frequently (monthly, quarterly, semi-annually or annually) you would like to be paid – payment amounts will vary based on the performance of your investments and will continue until your account balance reaches zero.
You can change your systematic withdrawal option at any time.
You can continue to manage and change your investment options while receiving systematic withdrawals. Since market risk is involved, you may not be paid as much or as long as you originally expected, depending on the performance of your investments.
- Lump sum – With a lump sum withdrawal you receive the entire balance of your account, and the account is closed. Unless the money is rolled over into another qualifying plan within 60 days of receipt, it will be taxed based on your tax bracket. Keep in mind that receiving a lump sum may push you into a higher tax bracket. Qualifying Roth 457 and Roth 401(k) withdrawals may be taken tax-free.
- Partial lump sum – With a partial lump sum withdrawal, you can withdraw part of your account balance as a lump sum and leave the remainder in your account. Again, your money can stay in your account, regardless of your employment status.
- Fixed annuity – An annuity is a contract issued by an insurance company that pays you a guaranteed income. You can buy one with just part, or with all of your retirement savings. When you purchase an annuity, you can decide whether to be paid as long as you live, or just for a fixed period of time. You can decide whether to be paid monthly, quarterly, semi-annually or annually. All annuities are not the same, so it’s important to learn the differences. For example, some annuities allow beneficiaries, and some do not. MSRP offers annuities that may be purchased “wholesale”—without commissions or sales charges. Make sure you ask a Team MSRP representative for more info.
Get the help you need
Talk with one of our Team MSRP Retirement Specialists if you have questions about receiving your money in retirement. Retirement Specialists may not offer tax or legal advice. You should consult your own counsel before making any decisions about plan withdrawals.