HOW CAN YOU TAKE DISTRIBUTIONS FROM A RETIREMENT PLAN?
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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
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.