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August 14, 2014 at 8:00 AMComments: 0 Faves: 0

What to Do With Your 401(k) After Retirement

By Jason More Blogs by This Author

If you've worked hard and retirement is in your near future, you’re probably excited about what retired life will look like. It will likely be a time for you to relax, pursue new or different hobbies, or to simply devote more time to the things that you already love.  

When you get closer to retiring, though, you need to understand your assets and make decisions about what you should do with your 401(k) retirement fund. Here are a few options to consider.

Option #1: Roll into an IRA.

If you roll your 401(k) into an IRA this gives you a little bit more control over your investments. This option often allows you to invest in mutual funds and in general, will give you more investment choices.

Option #2: Cash it.

If you've put in a significant amount of time with one employer, you likely will have a pretty good chunk of cash when it comes time to retire. By cashing it out, you’ll have one large lump sum and that means, you can do whatever you want with it. Invest it, take it and run to the nearest tropical island, or add it to another retirement account – the options are all yours.

Option #3: Keep it with your employer.

This is probably the easiest choice. You’ll be able to avoid income taxes and your money will continue to grow in a tax-deferred account. However, keeping it with your employer can mean that you have limited investment options and there may be other limitations on withdrawals.

There are a lot of things to consider when you’re about to retire. Whether you take your entire sum in cash up front, or you decide to withdraw it over time, be sure to factor in your social security and be sure what the limitations are. If you’re not sure what option is best for you and your specific situation, set up an appointment with your financial advisor to review your entire financial situation. Making sure that you have a grasp on your financial future means that you will set yourself up for a long, happy retirement. 

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