Discussion:401-K payouts

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Discussion Forum Index --> General Chat --> 401-K payouts

Actionbsns (talk|edits) said:

30 July 2009
I'm just curious where people are putting funds from 401-K's to begin receiving their monthly incomes. My brother has his 401-k in Home Depot stock, doesn't need it right now, so we're just waiting for the stock market to recover. But when I researched where to put the funds, it gets confusing. I know that when we eventually sell the stocks we can put the funds into a tax deferred annuity with an insurance company and set up a program of monthly payments. That should also prevent him from paying tax on all of the gain in one year. When I look at places like Vanguard, they want your money to invest in the 401-K, but there doesn't seem to be any help in the actually payout. But what other options are there?

Wonder Woman USA (talk|edits) said:

30 July 2009
If your client is no longer working for Home Depot, why not transfer the 401k account to an IRA. They can continue to hold the Home Depot stock; some will be sold when they take distributions.

Or they can sell it all, and keep the $$ within the IRA, reinvest in other stock, put it in a money market, or whatever.

There is no gain or loss within the IRA (no capital gains tax); all distributions are taxed as ordinary income.

Actionbsns (talk|edits) said:

31 July 2009
That's not the issue. He will eventually need to be placed on a regular income schedule. That's where my question lies, who is doing the pay out plans for people. Since 401-K's are not pension plans, nobody's charged with that responsibility. I'm curious what the rest of the world is doing when they reach the pay out age.

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