Typically, 401(k) investors roll out of their plans into IRAs when they retire or leave the company. But employers are starting to encourage retirees to stay put, in part because larger plans can better control costs. Some 47.8 percent of employers have a policy for retaining retiree assets, up from 28.3 percent in 2015, according to Callan.
But so far few plans offer help for retirees seeking to develop a retirement income strategy. Only 24 percent of plans offer a withdrawal calculator, the Callan survey found, and only 11.6 percent offer an annuity.
Your plan may also have few options for tapping your retirement portfolio. A 2017 survey by benefits consultants Alight Solutions found that 33 percent of plans provide a lump sum withdrawal option only, while 66 percent also allow installment payments, and 69 percent permit partial distributions.
So before you reach your retirement date, find out the rules for retirement withdrawals at your 401(k).
“You may find it convenient to keep your money in the plan, especially if your costs are low,” says Ward. “But if you don’t have the flexibility you need, that may be reason to roll over to an IRA.”
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