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  Friday November 24, 2017

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HOW CAN YOU TAKE DISTRIBUTIONS FROM A RETIREMENT PLAN?
Learn even more about this topic with the Encyclopedia of Personal Finance™

Welcome, retirement! When it finally arrives, what choices do you have in how you receive distributions from your retirement plans? If you are age 59½ but have not yet reached your required beginning date, you can take distributions of any amount whenever you like. But once you reach age 70½ and your required beginning date, you must decide how you would like to take out the money you worked so hard and long to save.

You have two basic choices: You can either take a one-time, lump-sum payment of the entire amount in your plan, or you can take a series of payments to meet the annual required minimum distribution.

Some employer retirement plans, for example, defined benefit plans, build the minimum distribution requirement into their strategy. They offer annuities from which you receive monthly or other regular payments that meet your minimum distribution requirement. The annuity is a contract usually issued by a life insurance company that provides payments throughout your lifetime or the joint lifetime of you and your beneficiary (often your spouse). Another type of annuity provides payments for a fixed period, called a term certain.

If you have a different type of retirement plan, such as an IRA, and want to take periodic payments, you can compute them yourself using available IRS tables or with the assistance of a financial advisor. You can take your required minimum distribution as one annualized payment, or you can receive payments monthly, quarterly or at other intervals.

Determining your periodic payments deserves an article to itself.




LEARN EVEN MORE WITH THE ENCYCLOPEDIA OF PERSONAL FINANCE. CLICK HERE!

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