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Jul 18 2011 12:00AM

Question


I am 66 years old and still working. I have about $100,000 in my 401(k) retirement plan. Should I withdraw the funds and put it in an Individual Retirement Account (IRA)?

Answer


“To begin with, you’ll need to check with your company to determine whether you are even allowed to withdraw anything out of your 401(k) while you are still employed there,” said Aaron Gabriel, CFP®, CIMA, MBA, of Raymond James & Associates, Inc. “In addition, many companies offer the benefit of contribution matching into the employees’ 401(k) plans (in addition to the employees’ contributions themselves), which can serve as an added source of growth over time.

“If you are getting close to retirement and the point when you’ll need to draw from this amount to supplement your retirement income, you might want to consider shifting the investments within your 401(k) into a more conservative allocation.

“Once you decide to leave your company, you can then directly transfer the 401(k) account into an IRA rollover account at another financial institution. No immediate tax consequence should apply if treated as a true direct rollover. At that point, you and your financial adviser will have a greater array of choices with which to manage the account, consistent with your financial goals and objectives.”

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