Retirement Planning

Planning for my 401(k) During Retirement

There are many decisions to make when preparing to retire. Many people will depend on their 401(k) as a source of retirement income. But what you do with the actual account depends on your needs.

What Should I Do With My 401(k) Plan When I Retire?

If you’re getting ready to retire and have a 401(k) with your company, you may be thinking about cashing it out. After all, since you’ll no longer be an employee that’s your only choice, right? Wrong. The fact is, you have a couple options that may be able to spare you from being hit with a big tax bill when you leave work and get ready to retire.

Leave it with your former employer.

People often think that since they are no longer an employee, that they must immediately move the funds out of their employer sponsored 401(k) plan when they leave. If you’re not sure what to with your 401(k) plan on your last day on the job, don’t panic. Many employers sponsor plans that will allow you to keep your money in your plan until you’re ready to move it out. They also have a fiduciary responsibility to continue to monitor and financially manage the funds in your 401(k) plan with your best interest in mind. So unless you’ve been extremely unhappy with the management of your 401(k) plan over the years, or if you want to take on the task of managing your funds on your own, don’t rush yourself. If you have questions or concerns, consult with a qualified financial planner.

Roll it over.

Another option is to roll over your entire 401(k) into an Individual Retirement Account (IRA). However, keep in mind that you need to move over the funds by way of a trustee-to-trustee transfer. Within the retirement industry, this term refers to a transfer where your money is moved non-reported between retirement savings accounts of the same type. It’s a process by where the money in your 401(k) transfers directly into your new IRA, bypassing you all together. In other words, you never actually take possession of the money in your 401(k), saving your money from being taxed at that time.

For more information on 401(k) plans as well as other retirement plans, visit the Protective Learning Center.

Note: This article is for general informational purposes only and it not meant to provide any financial advice. Please see a professional financial advisor.


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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

401(k) Plan

Wondering what to do with your 401(k) plan when you retire? You have more than one option, and cashing in your 401(k) plan immediately does not have to be one of them. This article looks at two considerations when it comes knowing what to do with your 401(k) plan when you leave your job and retire. For more information, visit our learning center.

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