Fooldaveonce asks:<<I retired in April and was notified by the company that handles my former employer's 401(k) plan that I will have to withdraw my funds next year. (It was a small company with fewer than 25 employees thus we were never offered the typical investment options. The company typically kept about 55% in stocks, 40% in bonds and 5% in cash. We employees received reports of our funds' worth annually as of Dec. 31. I estimate my fund has something in the $75,000 to $80,000 neighborhood.Between us, my wife and I have about $800,000 in investments of which approximately $420,000 are in tax-deferred accounts. She is also retired.My question is, should I roll over the 401(k) into an IRA or take the money, pay the taxes and invest it stocks or mutual funds?We need more than what we receive from Social Security to continue our present lifestyle, so some suplemental income is needed.>>Much depends on your income tax situation, how you intend to invest the proceeds, and how long before you must tap into them for living expenses. You should discuss this issue with your tax advisor; however, a $75K addition to your taxable income will take a mighty big chunk out of your lump sum. For most folks, transferring that sum to an IRA is better so it can be taken in smaller chunks and can continue to grow on a tax deferred basis. Talk it over with your tax person and run a few investment scenarios using the IRA and a taxable account to see what appears best for you.Regards..Pixy
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