Ask Terry Questions withdrawals from retirement plan

withdrawals from retirement plan

By Terry Savage on March 26, 2017 | Financial Planning / Retirement

I have a 457 that I will be able to draw down due to my age I need your help on how to invest it or were to invest it

Terry Says

OK, you didn't give me a lot of details.  So here's the first question -- you CAN draw down (assuming without penalty so that you are age 59-1/2) but do you NEED the money??  If not, leave it growing tax-deferred as long as you can.  Of course, in the year AFTER you reach age 70-1/2, you MUST start drawing down, according to a schedule prescribed by law.  Your custodian will help you do that.  One more thing, sometime after you retire you might want to consider moving (roll over) your 457 plan to a place like Fidelity or Vanguard, where you can have a a broader choice of investment options -- including some more conservative ones that are appropriate for a retiree.  Your workplace plan typically has growth options more suitable to younger savers.  They will help you do a rollover IRA to avoid any tax consequences. With that as a starter, and assuming you don't need to withdraw from your plan, and are not required to yet, let me suggest you leave the money in either the 457, or in a rollover IRA. Remember, you will have to pay ordinary income taxes on any withdrawals, so you will have less month to invest.   Then it's your choice.  You can spend it, set it aside to have liquidity outside your retirement plan in a bank MM account -- or choose to make some more aggressive investments.  That all depends on your overall financial situation.  To figure that out, you might want to meet with a fee only financial planner (who is not trying to sell you something)!  Go to www.feeonly.org to do a search.

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