Retirement at 55 with Pension and 401(k)

I retired this year (2015) at age 55. My company provided a pension with 5 year payout. A portion of the pension payout is going to an IRA account. I also have a company 401(k).

Is it better to leave the company 401(k) “as is” or is it more advantageous to transfer it to a traditional IRA, Roth IRA or have it rolled into the pension funded IRA account? If it is rolled over, should that occur this year? Are there any potential tax issues by leaving the 401(k) “as is”?



You may want to leave the 401k in place until you reach 59.5 because you can take penalty free distributions from the 401k under the age 55 separation exception. If you roll it to an IRA you will have to wait until 59.5 OR start a rigid 72t plan that must last for 5 years. This is best avoided since 72t plans are not flexible and any error will result in retroactive penalties and interest. Another reason to leave the 401k in place might be if the investment options are good and have very low costs, or if your state does not protect IRA accounts from creditors. If you don’t need money from the 401k before 59.5 and these other factors do not affect you, you can roll the 401k by direct rollover into your TIRA (or Roth IRA in a taxable conversion). The rollover is tax free no matter when you do it unless you roll it to a Roth IRA.



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