You may have several sources of retirement income with different withdrawal and tax rules, so you will need an overall income strategy. Start by making a list of your income sources and include the monthly income amounts such as:
Social Security
Go to www.ssa.gov to confirm the age at which you can receive full benefits. You can begin taking reduced benefits at age 62, but you may want to wait until you are eligible for the full benefit amount at your Full Retirement Age. Or, you can choose to wait until after you have reached your Full Retirement Age to collect an even higher Social Security benefit.
Personal savings
- IRAs
- Stocks, bonds, mutual funds
- Annuities
- Cash value life insurance
- Real estate
Employer-sponsored
retirement plans
- If you or your spouse/partner has a pension benefit from your or his/her employer, be sure to gather current information.
- Consider any pension or savings plan accounts from all prior employers for you or your spouse/partner.
- You can set-up a monthly withdrawal plan from your ABA Retirement Funds Program account, while continuing to use the Program’s services and investments.
Work
If you plan to keep working during your retirement years, check with Social Security to see if employment will affect your benefits.
Develop a plan, detailing the accounts from which you will be withdrawing money, and the order. Don’t forget – in all likelihood you will owe taxes on some or all of your withdrawals – so consult a financial planner or tax advisor.
Plan Your Distributions to Avoid Penalties
If you are under age 59½, taking a distribution other than a rollover could require you to pay taxes and penalties. Mandatory 20 percent federal income tax withholding will be applied to distributions eligible for rollovers that are not directly rolled over. State tax withholding will be applied as required by your state of residence.
Additional withholding may be requested. If you are not rolling over your funds, they may also be subject to an IRS 10 percent premature distribution penalty tax unless an exception applies. You should speak with your tax advisor regarding the distribution options that are right for you.
ABA Retirement Funds Program
P.O. Box 55072 • Boston, MA 02205-5072 • 800.348.2272
contactus@abaretirement.com • www.abaretirement.com
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