Ask Terry Questions IRA and 457 disbursements

IRA and 457 disbursements

By Terry Savage on August 18, 2021 | Financial Planning / Retirement

I am turning 70 this month and need information on what to do with an IRA and a 457b account. I understand I have to start withdrawing from them at age 70 1/2. I have a pension from the City of Chicago but nothing from Social Security. Can these accounts (IRA & 457b) be changed into annuities?

Thank you.

Terry Says

Well, you don’t have to start taking money out right away. The law changed the Required Minimum Distribution date to the year in which you reach age 72. When that time comes, you will call one of your custodians — either the IRA or 457b and ask for the total amount of your RMD. (You can take it from one or both of the accounts.) Just make sure you are properly invested INSIDE your retirement account so you have some liquid assets and are not forced to sell stock funds at the wrong time. I always like to have at least two years of withdrawals liquid in my accounts.
There is no need to buy an annuity. How ever, you could use some of your IRA money to purchase an immediate annuity. YOu’ll get a smaller amount ofmoney, but it is guaranteed to last your lifetime (or stop when you die!) Go to www.ImmediateAnnuities.com to see what monthly sum you could get from a reputable annuity company. Do not contact a sales agent — because these are commission-free products so they will try to sell you something else!!
And put only a small amount into an annuity if you decide to go that route. What looks like a nice hunk of money today will be ravaged by inflation in the future.

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