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Barbara Whelehan writes Boomer Bucks for Bankrate.comOvercoming rollover fears and anxieties

Dear Readers,
Thanks for your letters. Frankly, I'm often at a loss when someone asks me what they should do with their retirement money. It can get really complicated, as I explained in a recent column on retirement-plan distribution land mines. However, that column prompted many of you to ask questions. So I'll attempt to answer them, recruiting the help of experts in the field.

In the future, it's probably best to direct personal finance queries to Bankrate's Dr. Don Taylor, who has the credentials with an impressive array of abbreviations trailing his name (Ph.D., CFP and CFA). I am simply a journalist who enjoys writing about financial issues that affect Americans. But that doesn't mean I don't enjoy hearing from you. Thanks again!

Dear Boomer Bucks,
I plan to retire at 62, in two years. I have a 401(k) at work and would like to roll over my 401(k) into something that I will not have to pay tax on, but will be able to withdraw money from if I have to. Is an IRA the way to go?
-- Sandi

Dear Sandi,
In many cases, it makes sense to roll 401(k) money into an IRA, though I suggest you do a trustee-to-trustee transfer of funds so that the funds are not subject to a 20-percent mandatory withholding for tax purposes. In other words, the name of the game is to keep the tax-favored status of the money intact as you move it around.

Then again, you can leave it in your 401(k) plan and make withdrawals from it after retirement.

"It's worth noting that as an ERISA plan, the 401(k) has a little more creditor-protection value in the event of a future liability, although the improved protection for IRAs under last year's bankruptcy act makes this a less-urgent issue than it once was," says Michael Kitces, director of financial planning at Pinnacle Advisory Group in Columbia, Md. (ERISA stands for the Employee Retirement Income Security Act, a law passed in 1974 that established minimum standards that protect workers in these plans.)

Before you do anything, I strongly suggest that you do some research to determine how to set up your retirement accounts to your best advantage since you are on the cusp of retirement. Mutual fund companies are a good source of information. Many offer retirement-planning service programs for a reasonable fee. For instance, Fidelity has an "income management account" that coordinates your income from sources such as Social Security, pensions, IRAs, etc., to help you meet your retirement needs.

You might also want to check into getting an immediate annuity with a portion of your assets if you want guaranteed income for life. To get an idea of the lump sum you need to have for a particular monthly payout, check out the calculator at, but use this as a starting point in your research. Low-cost providers such as Vanguard and TIAA-CREF offer annuities. Make sure you understand all your options before making a decision.

If you feel more comfortable working one-on-one with a financial planner, shop around until you find one that satisfactorily answers all your questions. A good one can be an invaluable resource for investment planning and retirement income management.

Next: Atlanta Geek's dilemma
Page | 1 | 2 | 3 | 4 |
Retirement-plan distribution land mines
Reporting 401(k) and IRA rollovers
Retirement account options
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