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Distributions from Your Retirement Plan

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.

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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*Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. BancorpSouth Wealth Management is a trade name of BancorpSouth Bank, a division of Cadence Bank. Infinex and the bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.
Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. Eaton Federal Financial Services is a trade name of the bank. Infinex and the bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.

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