401k into an Immediate Annuity?

Discussion in 'The Pub' started by oldlefty, May 28, 2015.

  1. oldlefty

    oldlefty Member

    Nov 9, 2010
    Oswego NY
    Time to make a major life decision- so I'm looking for advice in the TGP Pub... :eek:

    65, retiring within a month. Two 401ks, SS and a small pension. I want minimum risk and to convert my savings into a monthly income source. From the books I've read I'm leaning towards an immediate annuity. Biggest risk there seems to be dependability of the "insurance product source".

    Why wouldn't I want to do this?
  2. gigs

    gigs Member

    Nov 20, 2009
    Pittsburgh - aka SIX-burgh
    I might be wrong, but you can't leave your annuity leftovers to your beneficiaries when you die (e.g. kids). I think you could get a steady income source if you pick the proper no-load mutual funds rather than living with the limitations of an annuity. Again, I could be wrong.
  3. Dr. Tweedbucket

    Dr. Tweedbucket Deluxe model available !!!11

    Feb 22, 2007
    Gamma Ray detection station on Mt. Kwakkleberry
    Annuities are teh Debil.

    The problem is the fees and the fact they have you locked up for years ..... you can't take your money out without some ridiculous graduating penalty. I think you'd be better off going with some funds and bonds where you have more freedom..... we need some experts to chime in here.
  4. sausagefingers

    sausagefingers Supporting Member

    Dec 22, 2007
    'Neath the shade of an old walnut tree
    Why not just start withdrawing conservatively from the 401k and then start SS at 67?

    It's complex and depends on your health, how much you have, heirs and what you want to leave...we can guess your details but you should consult someone that has all the numbers and an independent eye.
  5. VCuomo

    VCuomo Member

    Nov 5, 2003
    Southern California
    Not a good idea IMO. I'd advise that when the OP retires he moves the money ASAP into a rollover IRA; that will almost certainly give him much more flexibility in investment choices and more than likely lower his fees too.

    Also, the OP's "full retirement age" for SS is 66 (there's no reason for him to defer collecting SS until he's 67).

    :agree And he should consult with a CFP who does not receive a commission or any other type of compensation based on the financial products he recommends.
    Last edited: May 28, 2015
  6. stephenf

    stephenf Member

    Apr 4, 2012
    Moving the money into a rollover IRA is a good idea because:
    1. You can add money to the IRA if you want to. You no longer work at the 401k place so you cannot make contributions.
    2. Get you former employer's name off the money. It's all yours - they're no longer adding anything to the account.
    3. The larger money firms, i.e. Fidelity, allow pretty much the same investment options with a rollover IRA as they do with a 401k.

Share This Page