If retirement is less than five years away and you're eligible for a qualified retirement plan benefit, you should start evaluating which payout option might be best for you. While this decision doesn't become critical until retirement is staring you in the face, projecting which payout looks best can help you make necessary adjustments today. Should you save more? Will it be necessary for you to purchase additional life insurance? There are many small decisions along the way before making the big decision: Should you take an annuity payout or a lump-sum distribution?
Both defined benefit plans and defined contribution plans may offer you a choice of payout options. You may decide to take an annuity payout or lump-sum distribution based on the type of plan you have, and whether you have one or both types of plans. To help you plan and avoid some costly mistakes, consider the following questions:
Your employer should be able to provide you with estimated payout projections of the various annuity options.
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