When I Retire, How Can I Tap Into My Retirement Fund?

Defined Benefit Pension
  • A single person will get a fixed monthly benefit from the day he/she retires until the day he/she dies.
  • A married person can choose among the following:
  • Under the joint and survivor annuity provision (J&S), the individual can choose to have his or her beginning benefit lowered but half of his or her benefit will continue to go to the spouse after the individual dies.
                       Note: A J&S restore option is sometimes offered to retirees. This option restores the individual's benefit to the full amount if his or her spouse dies first.
  • Some plans allow a spouse to continue to receive a larger portion of the benefit, in some cases up to 100 percent, in return for a reduction in the individual's lifetime benefit.
  • A spouse can decline the right to continue receiving payments after the individual dies. If this happens, the benefit will be the same as for a single person.
                     Note: Pension payments begin once the married individual has retired and picked the manner in which he or he wants to have funds withdrawn
401(k) Plans
An individual can take money from his or her 401(k) account at age 59½ without being subject to a 10 percent early distribution penalty. Any money withdrawn from a 401(k) account will be subject to tax. Many people roll money from a 401(k) account into an IRA or purchase an annuity to provide them with an income stream during retirement. To decide what to do with your money, consult a financial planner or investment advisor.
IRAs
After reaching age 59½, an individual can withdraw freely from an IRA account. Funds coming out of a traditional IRA are taxable in the individuals top tax bracket, except to the extent that they represent a return of nondeductible contributions. With traditional IRAs, the law requires that you begin taking a set minimum amount out of the fund when you reach 70½. A Roth IRA is not subject to this withdrawal requirement.