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Life Planning Center > Getting Ready To Retire / Retired
Distributions from Your Retirement Plan
  • Introduction
  • What Initiates a Distribution?
  • Five Dates You Should Know
  • Selecting a Distribution Option
  • Deciding on a Payout Option
  • Annuity Form of Payout
  • Advantages and Disadvantages of Taking an Annuity
  • Taking a Lump-Sum Distribution: Know Your Options
  • Annuity vs. Managing Your Own Retirement Assets
  • Advantages and Disadvantages of a Lump-Sum Distribution
  • The Roth IRA–How Does It Fit In?
  • Making the Decision: Annuity or Lump-Sum?
  • Taxation of Distribution Options
  • Rollover into a Traditional IRA
  • Advantages and Disadvantages of Rollover to a Traditional IRA
  • Annuity Payouts
  • Early Distributions
  • Should You Defer Your Retirement Plan Distribution as Long as Possible?
  • Distributions Following Death

Deciding on a Payout Option

The payout option you elect is probably one of the most important decisions you'll ever make. That's because your decision is irrevocable. Understanding your distribution options is crucial to your planning.

  • Connect with a Financial Consultant

Retirement Plan Distribution Options

With a defined-benefit plan, your employer may give you a choice of a fixed monthly payout known as an annuity, a lump-sum distribution, or a combination of both. With a defined-contribution plan, you may be able to exercise these options:

  • Annuitize your total investment and receive a fixed monthly income.
  • Leave your money in the plan until you need it, or until the age that minimum distributions must begin (72 (70½ if you reached age 70 1/2 by January 1,2020)).
  • Take it as a lump sum distribution and report it as taxable income in the current year, or defer taxes by either rolling it over to a traditional IRA, or by rolling it over to a new employer's plan within 60 days. You may be able to postpone distributions from your current employer's retirement plans if you are still employed, even if you are older than 72 (70½ if you reached age 70 1/2 by January 1,2020). (This doesn't apply if you are a 5% owner; i.e., you own more than 5% of the company.) Distributions from a Roth IRA can be postponed beyond age 72 (70½ if you reached age 70 1/2 by January 1,2020), whether you are employed or not.

SUGGESTION: If you have both a defined benefit plan and a defined contribution plan and don't need all the income at once, consider taking an annuity payout from your defined benefit plan and letting your money grow tax-deferred in the defined contribution plan.

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Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Franklin Mint Federal Credit Union and Mint Wealth Advisors are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Mint Wealth Advisors, and may also be employees of Franklin Mint Federal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Franklin Mint Federal Credit Union or Mint Wealth Advisors. Securities and insurance offered through LPL or its affiliates are:

Not NCUA Insuredor Any Other Government Agency No Credit Union Guarantee Not Credit Union Deposits May Lose Value

The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: NJ, PA, NY, DE, AZ, MI, FL, MD, TX, VA, GA, NC.



Financial Learning Center content created by TrueBridge, Inc. The information provided is based upon sources and data believed to be accurate and reliable. The content contained herein is intended for information and illustrative purposes only, should not in any way be construed as a personal recommendation, and should be used in conjunction with individual professional advice.

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