Take Regular Withdrawals at Retirement
Did you know that there are several ways you can start receiving your retirement funds? You might be surprised at how many choices you have. Do not be overwhelmed! It is a good thing to have so many choices — because you have got a better chance of finding a payout option that fits you best.
No one said you have to take your money when you are ready to retire. If you are in a good position and can let your money stay and possibly grow, you can stay put! Your money can potentially continue to grow until you are required to take a distribution at age 70½.
Of course, investing involves market risk, including possible loss of the money invested. Your Retirement Specialist will help you understand how to deal with and adjust for market risk through retirement.
- Installment Payments – This option allows your investments to stay active while you receive regular payments. You have two payment options:
- Receive a fixed amount at the frequency you select (monthly, quarterly, semi-annually, or annually) until your account balance reaches zero.
- Choose how long and how frequently (monthly, quarterly, semi-annually, or annually) you would like to be paid – payment amounts will vary based on the performance of your investments and will continue until your account balance reaches zero.
You can continue to manage and change your investment options while receiving installment payments. Since market risk is involved, you may not be paid as much or as long as you originally expected, depending on the performance of your investments. Withdrawals are taxable as income to you in the year the payments are made.
- Lump Sum – With a lump sum withdrawal you receive the entire balance of your account, and the account is closed. We will withhold 20% of the lump sum payment for federal taxes. Keep in mind that receiving a lump sum may push you into a higher tax bracket. Qualifying Roth withdrawals may be taken tax-free, however, certain requirements may need to be met.
- Partial Lump Sum – With a partial lump sum withdrawal, you can take part of your account balance as a lump sum, and leave the remainder in your account. Again, your money can stay in your account, regardless of your employment status.
Remember that qualified plans or individual retirement accounts are not the same and some may be subject to a 10% penalty tax for withdrawals prior to age 59½.
Get the help you need
Contact us to discuss which withdrawal option works best for you. Neither Nationwide nor its representatives may offer tax or legal advice. You should consult your own counsel before making any decisions about plan withdrawals.