- FINANCIAL PLANNING
- OUR BANK
There are many factors to consider when deciding the best way to take your retirement distributions.
To help you plan and avoid some costly mistakes, consider the following questions:
Your employer should be able to provide you with estimated payout projections of the various annuity options.
After considering all of the factors when making your distribution choice, you should then determine the most effective way of taking your distribution from your retirement plans, giving attention to minimizing income taxes and excise taxes. A choice on the optimal form of retirement benefits to be received can be objectively determined based on the after-tax monthly retirement income that each option will provide, given your expected marginal income tax rate in retirement, the rate of return that can be earned on your retirement funds, the expected benefit payout period, and the balance in the qualified plan account at retirement.
But these mechanical computations must be considered with non-tax issues, such as your ability to manage large sums of cash, the possibility of you outliving the assets, and what your thoughts are on your life expectancy. Your overriding consideration is to remember that this money must last you a lifetime - and it may be a much longer lifetime than you expect. An annuity in most cases pays a benefit for your lifetime (so you can't outlive your capital). However, if you die prior to your life expectancy, you and your beneficiary, if applicable, may not collect the full value of your accrued benefit. With a lump-sum distribution, you manage the money, and may outperform the annuity. You can also continue to defer taxes by rolling the money into a traditional IRA. You may also be able to take advantage of tax-free growth by converting to a Roth IRA. However, if you don't properly manage your money, it may not last as long as you need it to.
Your financial professional can help you clarify how to use the different payout calculations in your retirement planning and discuss with you the considerations involved in selecting a distribution option.
Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Heartland Bank and Heartland Planning Associates are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Heartland Planning Associates, and may also be employees of Heartland Bank. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Heartland Bank and Heartland Planning Associates. Securities and insurance offered through LPL or its affiliates are:
|Not Insured by FDIC of Any Other Government Agency||Not Bank Guaranteed||Not Bank Deposits or Obligations||May Lose Value|