401(k) Distribution Options

If you are retiring or leaving your employer and have a 401(k) or similar retirement plan, you have some crucial decisions to make. What is the best strategy? Lump-sum? Rollover? Trustee-to-trustee transfer?

Qualified funds in your retirement accounts enjoy special tax-deferred status. However, if you elect a lump-sum distribution, all of that money (and growth!) is “tax-infested” meaning it has never been taxed and will be

become taxable all at once if immediately withdrawn and not re-deposited into another qualified account by the deadline.

The Tax Code allows a 60 day window to relocate or rollover the money from your qualified employer retirement plan to another. Keep in mind that taking a lump-sum distribution or doing regular rollover also means your employer is required to withhold 20% for federal income tax.

Would you rather continue to enjoy the tax-deferred status or even turn your tax-infested retirement plan into a tax-free one? Would you like to accomplish this without a 20% withholding?

Your retirement distribution expert and tax professional can help you understand the lump-sum distribution, rollover and trustee-to-trustee transfer options you have available with respect to your 401(k) or other retirement plans.

A retirement plan review is part of the complimentary services your retirement distribution expert and tax professional offer to their clients - make sure you take advantage of all of the free planning and review services that are available!