Retirement Plan Participant Distributions

August 8, 2012 at 4:10 pm Leave a comment

The Chicago Tribune has a nice article by Elliot Raphaelson entitled “401(k) conversion: Does it make sense for you?”. Located at http://www.chicagotribune.com/business/sns-201207100000–tms–savingsgctnzy-a20120710-20120710,0,2523156.story, the article recaps distribution options when a participant severs employment.  As a caveat, the author appears to be using the term conversion for rolling over a distribution in cash and rollover for an in-kind rollover distribution.  Readers should note that not all plans will allow for in-kind distributions.  However, his comments regarding terminated participants age 55 to age 59 participants are noteworthy.  I will add that the article does not mention that not all plans allow for multiple distributions (a participant who decides to take a payout during that time frame may be required to take the whole account at once rather than stretching across years).  However, if there is financial uncertainty, he makes a point worth sharing which is that you may want to keep your retirement funds in the 401(k) until age 59.5 and then rollover.   The participant can always do a split distribution by rolling over to an IRA or other qualified plan and taking a cash distribution paid directly to the participant if the plan requires a single lump sum distribution.

Thanks for reading and have a wonderful day!   Please be sure to sign up for my blog, and follow me on twitter @ChristineGurney.

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Christine Gurney

A pension professional who shares her thoughts and ideas about the pension world for industry members and anyone else interested.

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