From
Your Perspective:
Managing your retirement nest egg
Using a rollover
IRA
If you’ve contributed to a
401(k),
403(b),
or other retirement savings plan, you’ll have to decide what
to do with your
vested
assets
when you retire. Whatever plan you’ve been
in, you always have the right to move your assets into a rollover
IRA.
It’s an option many experts suggest that you consider
seriously.
It's true that having an IRA puts the burden
of identifying appropriate investments and managing withdrawals
on your shoulders. But you may decide that the responsibility
is offset by the power you gain to manage your money.
1.
You might start withdrawing right away so that you can afford to do the things that are important to you now — especially if you have other sources of retirement income.
2.
You might wait until the last possible day to take required withdrawals so that your account can continue to accumulate
tax-deferred earnings.
If your account
includes company stock your employer has contributed, you
may want to take that as a lump-sum distribution. You’ll
owe income tax on the amount the stock was worth when
it went into the plan and
capital
gains tax
on any
increase in value if you sell the stock. But you
may still owe less tax than if you rolled the stock
into an IRA, sold it, and withdrew the value. That’s
because all IRA withdrawals are taxed at your regular
rate.
