How Does a 401K Work When You Retire?

Shawn Plummer

CEO, The Annuity Expert

A 401k plan is a retirement savings plan sponsored by employers, allowing employees to save and invest a portion of their paycheck before taxes are taken out. Upon retirement, there are several options for managing your 401k:

  1. Leave It and Withdraw as Needed:
    • You can keep your 401k with your former employer’s plan and withdraw amounts as needed.
    • Taxes are due on each withdrawal.
    • Required Minimum Distributions (RMDs) must start at age 72.
  2. Wealth Manager Management:
    • Hiring a wealth manager to manage your 401k can simplify the process.
    • They can create a strategy for distributing retirement income.
    • This option involves management fees.
  3. Roll Over to an IRA Fixed Index Annuity with Guaranteed Lifetime Withdrawal Benefit (GLWB):
    • You can roll over your 401k into an IRA fixed index annuity.
    • The GLWB provides a steady income for life.
    • Protects savings from stock market losses.
    • Typically lower fees compared to a wealth manager.
    • The remaining balance can pass to beneficiaries in a lump sum.

Comparison of 401k Management Options

Management OptionProsCons
Leave It and Withdraw as NeededFlexibility, No extra feesRequires self-management, Tax on withdrawals
Wealth Manager ManagementProfessional guidance, Simplified processManagement fees
IRA Fixed Index Annuity with GLWBGuaranteed income, Market protection, Lower feesLess flexibility, Annuity-specific rules


When you retire, you can either leave your 401k and withdraw as needed, have it managed by a wealth manager, or roll it over into an IRA fixed index annuity with GLWB. Each option has its benefits and drawbacks, from flexibility and professional management to guaranteed lifetime income and savings protection. The best choice depends on your individual retirement goals and financial situation.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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