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Jim Lentini: Don't wait to roll over IRA funds

Posted: April 19, 2010 4:25 p.m.
Updated: April 20, 2010 4:55 a.m.
Did you know that you don't have to wait until you retire or change jobs to roll over 401(k) assets? Certain retirement plan assets can be rolled over to an IRA even while you are still employed. If you review your 401(k) plan summary description with your financial advisor, you may find out that your retirement plan allows for certain in-service withdrawals.

In-service withdrawals that may be rolled to an IRA:

* Age 59 1/2: Most retirement plans allow employees over age 59 1/2 to take an in-service withdrawal.

* Prior rollover money: Many retirement plans allow prior rollover contributions to be withdrawn at any time.

* After-tax contributions: Many retirement plans allow after-tax contributions to be withdrawn at any time.

* Employer contributions: Some retirement plans allow employer matching contributions and profit sharing contributions to be withdrawn after two years.

* Five years of service: Some plans allow employees to withdraw all their employer contributions after five years of service.
When to consider in-service withdrawals to an IRA:

* You are looking to better diversify your retirement assets;

* You want more flexibility and control over your retirement assets;

* You would like to "stretch" your retirement distributions (most plans require a lump sum distribution upon the death of the participant);

* You would like to take advantage of optional benefits offered by a variable annuity, such as guaranteed withdrawal benefits and guaranteed death benefits;

* Spousal continuation benefits and options for contingent beneficiaries.

Remember, the tax-deferral feature of an annuity is already provided by the IRA and qualified plan. Therefore, an annuity contract should only be used to fund an IRA or qualified plan to benefit from an annuity's features other than tax deferral.

Two of the most important features not offered by other investments are guaranteed lifetime income options and guaranteed death benefits.

It is to your advantage to consult with a financial advisor familiar with both pension plans and annuities to consider these options.
Considering today's economic climate and legislation that will increase taxes and reduce government benefits, you should secure some portion of your retirement assets for your future income with guarantees you cannot outlive.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments Inc. His column reflects his own views and not necessarily those of The Signal.


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