Business Columns & Blogs

Investor’s column: When it’s time to retire, make choices that best suit your needs

If you are fortunate, the company you work for has set up a 401(k) plan, a pension plan or other arrangements to plan for retirement.

When it comes time for retirement, a supervisor or administrator of the plans may offer you various choices using the amount in your account, often referred to as the lump sum or account value.

Depending on the rules of the plans, there are many choices of handling your lump sum.

For instance, my father retired in 1975. He was offered the choice of moving his lump sum into an annuity for the rest of his life. It paid the highest monthly income of all the choices given him. He took it and received monthly income, but he died in 1992 at age 80.

Now a widow, my mother did not receive one more cent from my father’s annuity even though there was money left in it.


Because the annuity was only for my father’s lifetime. Mom lived 20 more years without income from the annuity. The annuity company kept the remaining balance of his lump sum.

Some annuities may have other payout options that allow the spouse to receive income during their lifetime.

Jim Zientara.jpg
Jim Zientara is a financial planner with Raymond James Financial Services, Inc., in Lakewood Ranch.

Another possible choice might be to leave the 401(k) and pension at the company. The value of your account may depend on their investment advisor and the investment choices available.

Another possibility is a rollover. It is a process of transferring the lump sum from the 401(k) and often the pension plan from the current administrator to another qualified administrator, such as a brokerage firm or bank.

Generally, a rollover is not a taxable event, but check with your tax advisor for the details.

Using a rollover of your lump sum, an IRA account is opened for you by the new qualified administrator. The lump sum is rolled over into your IRA account. If you should die, you have pre-named beneficiaries who will receive the balance in your IRA account.

At your death, your beneficiaries can roll over your IRA account into the beneficiary’s IRA account, called a beneficiary IRA. They also name beneficiaries in case they die. In general, the money can roll over from generation to generation.

Once the money is rolled over, you often have more investment choices available than usually offered by the company. You can select various forms of annuities, stocks, bonds, managed money, mutual funds, etc.

There are also options such as withdrawing your lump sum, which can have severe tax consequences, and rolling over to another 401(k). There are several options available and there are pros and cons with each one.

You should then work with a financial planner, who may guide you through the maze of investment choices and then set up a financial plan for you.

Your financial planner usually works with an estate attorney who can draw up your legal documents. They might include a living revocable trust, not only for yourself but also for your IRA.

You can choose a corporate trustee to manage your trust. It could be a trust company or a bank and you instruct in writing what you want to happen to your estate. The corporate trustee is under a fiduciary guidance to follow those instructions.

Being a former trust officer at two trust companies, I can attest to the benefits of a corporate trustee. Feel free to ask about them. However, the usual minimum in investing assets is $500,000.

Of course, there are so many other choices at retirement, such as Social Security, Medicare Supplement, where to retire, lifestyle, etc. The list is long, but at least you made it to retirement. Now enjoy it.

Consider starting with a financial planner who should be able to work with you, your attorney, your tax advisor and your family. You want a coordinated financial plan at least annually reviewed.

You may want to, but you will not live forever. It’s smart to plan today so your last wishes have a chance of coming true tomorrow.

Jim Zientara is a financial planner with Raymond James Financial Services, Inc. Member FINRA/SIPC. His website is and he can be reached at 941-750-6818. His office is at 11009 Gatewood Drive, Suite 101, in Lakewood Ranch.

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