Ask Terry Questions Monthly disbursements from 40l(k) or IRA rollover?

Monthly disbursements from 40l(k) or IRA rollover?

By Terry Savage on April 20, 2013 | Financial Planning / Retirement

I am 60 years old and retired. Effective April 1, I will be receiving a monthly check from my 401K plan to supplement the small monthly pension check I am receiving from my former employer. I have made arrangements with the 401K plan administrator to receive this check for the next 20 months to help with the bills. At the end of the 20-month withdrawal period, I will be able to file for social security. Once I start receiving social security benefits, that, in combination with my monthly pension, will be more than adequate to live on and the monthly 401K checks will be stopped automatically. I would like to roll over the entire balance of my 401K into a Fidelity account. The balance amount is $117,500. My question is, will Fidelity take over the monthly check disbursement to me for the next 20 months which I have already arranged for with my current plan’s administrator? Thank you.

SAVAGE SAYS: I highly recommend that you do the rollover first and then start the monthly distributions, which Fidelity can handle for you. They could send you a check, or automatically put the money into a money management checking?account, and you could write?checks against that account.

The reason for suggesting the rollover first, is that you will get investment advice from Fidelity, and they will take into account your need for cash withdrawals. They likely have funds better suited to this stage in your life than does your 40l(k) plan.

And don’t forget that when you stop this automatic disbursement upon receiving Social Security, you will be forced to reinstate at least some withdrawals in the year you reach age 70-1/2.



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