Retirement Planning/401K after 70 1/2


Hello Willard,

I'm 72. I retired when I was 69, and haven't worked since. Before turning 70, I contacted several times my ex-employer's HR and the investment company that holds my 401K, and asked them what should I do about the 70 1/2 distribution in order to avoid tax penalties, but they said I had to do nothing, but now I got a distribution from the fund. They're keeping almost $200 tax from approx. $900 distribution, so I'm getting only about $700.

What I'd like to do is get the money out and move it to either an IRA or Roth-IRA, but all the information I find about doing so, talks about people at a younger age. At my age, what would be the pros and cons of a rollover to an IRA vs a Roth-IRA?

Thanks in advance,


Dear Richard,

It appears that prior to this distribution your 401(k) account value was approximately $23,000.
By rolling this account to a regular pour-over IRA, there would be no immediate tax impact. On the other hand rolling it into a Roth IRA would likely have a tax of about $5,000. This would the same as a straight liquidation of your account.

This also would be the impact that your family would experience were you to die.

I get the feeling that you are not relying on this account for your income needs, and that you would prefer to pass on to your heirs as much as possible. If this is the case, and you are in good health for your age, I recommend that you transfer the value of your retirement account into a single premium life insurance policy. The benefit to your heirs would be better than what you have now, and you would eliminate any further income taxes on the policy value.

Willard R. Brumbaugh, LUTCF
(888) 792-2379

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Willard R. Brumbaugh, LUTCF


I have answered many questions regarding 401ks, IRAs and annuities as well as life insurance. I have been counselling against most Qualified Plans since 1994.


Ranked in the top 5 in retirement catagories at most of its last 2 1/2 years. Organizations I belong to: National Association of Insurance and Financial Advisors-California
Inland Empire Estate Planning Council

Life Underwriters Training Council Fellow

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