Spending your entire adult life working a job will eventually lead you to a point where you need to consider what happens when you reach your retirement age. This is a major milestone in your life, and it only makes sense to consider all your options. One of the biggest considerations at this point is what’s going to happen.
1. Keep Your Money Where It Is
Your 403(b) can serve many things once you are ready to claim it. Essentially, however, it’s also just another way of saving up for your retirement. You can choose to just keep it where it is if you don’t have any need for it just yet. If you have other sources of income when you retire, then keeping your 403(b) intact is definitely an option. However, it’s important to remember that you will face withdrawal requirements in the future via required minimum distributions if you go down this route.
2. Move Your Money to Another Account
There are numerous mutual funds and investment options available for your 403(b). However, if you wish to explore other alternatives outside of what your plan currently offers, then you can do so. All you have to do is roll over the money you saved up into another account, like a traditional IRA (Individual Retirement Account). People working with retirement planning specialists usually go down this route as it lets them have full control over what they’ve earned.
The good thing about transferring your money is it opens up a lot of different options for you. Let’s say you’re a little worried about the taxes on your money, you can move your money into a Roth IRA and pay the tax man upfront. This could potentially reduce the amount of tax on your retirement income in the future.
3. Take a Total Distribution from Your Plan
While this is an entirely valid option for anyone, it’s not always the best option. In fact, retirement consultants do not recommend taking a total distribution from your 403(b) plan at all, as it can actually be the worst thing you can do with your retirement fund. This should only be used as a last resort in case you need a huge sum of money due to a dire financial emergency that puts you in a tough situation. This is because taking all that money at once will result in a larger tax bill. The higher the amount, the higher the tax bracket you’ll be put into.
4. Make Periodic Withdrawals from Your Account
Perhaps the most common option chosen by many retired individuals is to keep the money in their 403(b) account and only withdraw from it from time to time. This will serve as your new source of income or as a supplement to other income streams that you are receiving.
However, it’s not that straightforward and simple. Some funds in your 403(b) account can take time to withdraw as it needs approval from your 403(b) plan’s third-party administrator for access. You also need to remember the 20% mandatory tax withholdings on your cash withdrawals.
If you feel like it’s time to consider your retirement options whether you’re only a couple of years away from retirement age, then you have every right to do so. It’s actually better since you get to consider all your options and do your own research. Make sure to take all these 403(b) options into consideration so you can choose whatever’s best for you and your needs.
When it comes to state employee retirement planning, you should work with someone you can completely trust. My State Pension is here to connect you with a specialized licensed representative that will help you maximize your benefits and retire with the peace of mind you need. Our network of retirement planning specialists, registered investment advisors, and licensed agents are all ready to assist you in getting the most out of your hard-earned money. Contact us today to schedule a free retirement planning consultation.