You’ve worked hard for every paycheck. Let’s help it keep working for you.
Old 401(k)s, Roth IRAs, pension choices, and the big question of turning savings into income all feel lighter with a plan. Start with a free consultation with a licensed insurance professional, and see your whole picture in one place.
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A trail of old accounts
A new job is exciting. Then there’s a new plan, and an old account you meant to deal with “later.” Over a career, that can add up to several accounts in several places, and the Department of Labor notes that plans sometimes lose track of the people they owe.
Now imagine knowing exactly what you have and where it is. Start with your former employers. The Department of Labor’s Retirement Savings Lost and Found database (lostandfound.dol.gov) can also help: after you verify your identity through Login.gov, it lists private-sector workplace plans linked to your Social Security number. Some older records may be out of date.
The rollover detour
When a retirement plan check is paid to you, the IRS says the plan generally must withhold 20% for taxes, even if you plan to roll it over. You then have 60 days to deposit it in another plan or IRA, making up the withheld 20% from other funds. Anything you don’t roll over is generally taxable, and before 59½ it may also face a 10% additional tax unless an exception applies.
A smoother path: the direct rollover
In a direct rollover, your old plan sends the money straight to your new plan or IRA, and the IRS says no taxes are withheld. Depending on the plans’ rules, your options usually include:
Leaving the money in the former employer’s plan, if the plan allows it
Moving it to a new employer’s plan, if that plan accepts rollovers (plans aren’t required to)
Rolling it over to an IRA
Cashing out, which is generally taxable and may add the 10% additional tax before 59½
Where the money lands matters, too
A direct rollover solves the tax detour, but not what happens next. If your IRA is invested in stocks or stock funds, it can fall when the market does. How would a big drop feel the year before you planned to stop working?
Another option for people close to retirement
Did you know there’s a type of insurance contract designed so that a market drop alone doesn’t reduce your account value? It’s called a fixed index annuity (FIA). According to the NAIC, an FIA earns interest based on changes in a market index, and the interest rate can’t be less than zero, even when the market goes down. The IRS allows an IRA to be set up as an annuity issued by a life insurance company, so an IRA can hold an FIA. Fees, withdrawals, and surrender charges can still reduce an FIA’s value, so the full features and trade-offs are below.
Your Roth IRA: tax-free later, but not market-proof
A Roth IRA is a gift to your future self. The IRS says qualified withdrawals are tax-free, generally once you’re 59½ and at least five years have passed since the first tax year you contributed to a Roth IRA, and the original owner never has to take required minimum distributions. But if your Roth IRA is invested in stocks or stock funds, it can still drop when the market drops, sometimes right when you’re close to needing it.
Same Roth benefits, less exposure to market drops
What if your Roth money could keep its Roth tax treatment and have less exposure to market losses? The IRS says a Roth IRA “can be either an account or an annuity,” and Roth IRA money can move tax-free to another Roth IRA, either through a direct trustee-to-trustee transfer or through a rollover completed within 60 days. That’s why some people move part of a Roth IRA to a Roth IRA held by an insurance company and funded with a fixed index annuity. Before you move:
It stays a Roth IRA, so qualified withdrawals can still be tax-free.
Under IRS rules, all of your Roth IRAs share one five-year clock for qualified withdrawals, so moving from one Roth IRA to another doesn’t restart it. Converted money has its own separate five-year rule, so ask before you move a recent conversion.
A direct trustee-to-trustee transfer has no tax withholding and doesn’t count toward the IRS limit of one IRA-to-IRA rollover every 12 months. A 60-day rollover does count.
An annuity adds no extra tax benefit inside a Roth IRA. The California Department of Insurance notes it usually doesn’t make sense to put an annuity in an IRA, because the annuity’s tax deferral adds nothing there. If you consider one, weigh its other features, like protection from market drops or lifetime income, against surrender charges, caps, and rider fees.
The pension decision you only make once
If you have a traditional pension, you may be asked to choose between monthly payments for life and a one-time lump sum, when the plan offers one. The CFPB calls it a one-time choice, and many people aren’t sure which is better. There’s no single right answer for everyone.
Compare both paths side by side
The monthly pension
- Steady income for life, with no investments to manage (CFPB, PBGC).
- If you’re married, a traditional pension generally must pay a joint and survivor annuity, which keeps paying your spouse at least 50% of your benefit after you die, unless you both waive it in writing (IRS, DOL).
- For most private-sector pensions, PBGC insures benefits if a plan fails, but only up to limits set by federal law.
- Less flexibility, and some options pay nothing to survivors (PBGC).
The lump sum
- Flexibility, and money you don’t spend can be passed on to your family (PBGC).
- You manage the money and carry the risk of outliving it or losing it to market drops or fraud (CFPB).
- Rolled over directly to an IRA, it generally stays tax-deferred, with no 20% withholding (IRS), and inside the IRA, it can be diversified.
- Some people use part of it to buy an annuity with a lifetime income feature, often an optional rider with an added fee, creating their own “paycheck” backed by the issuing insurer’s claims-paying ability, and keep the rest invested for flexibility.
Some plans allow a mix of both. Ask your plan administrator about your options, deadlines, and how the lump sum was calculated (PBGC, CFPB).
Will your savings last as long as you do?
Without a pension, retirement often means building your own paycheck from savings: deciding how much to withdraw each year and hoping it lasts. The CFPB notes that a pension spares you that math. Without one, the job is yours, and a market drop while you’re withdrawing can make it harder.
What if part of your savings could become a paycheck you can’t outlive?
Some fixed index annuities include features designed for exactly that question. Each one has its own costs and limits, and every guarantee depends on the insurer that issues it:
Income for life
Lifetime income usually comes through an optional rider, typically for an added annual fee. As long as you stay within the rider’s withdrawal rules, it can pay income for as long as you live, no matter what the market does, backed by the claims-paying ability of the issuing insurer. The NAIC notes payments can continue even if the annuity’s value reaches zero. Taking out more than the rider allows can reduce or end that income.
A share of the gains
Interest credits are linked to an index, up to a cap or participation rate, so you share in part of the gains but not all of them.
Protection from market drops
A market drop alone doesn’t reduce the account value, because the credited interest can’t be less than zero. Rider fees, withdrawals, surrender charges, and a market value adjustment, if the contract has one, can still reduce it.
A growing income base
Some income riders grow the income base, a value used to calculate lifetime income, not cash you can withdraw, for each year you wait to start income, usually up to a set number of years.
A bonus, with a catch
Some contracts offer a bonus. Bonuses can come with longer surrender periods, lower caps, or other trade-offs, and may be recaptured if you withdraw early.
And the trade-offs, as FINRA and the SEC describe them:
- Caps and participation rates limit credited gains, and some contracts let the insurer change them.
- FIAs are long-term. Withdrawals during the surrender period, often 6 to 10 years or longer, can mean surrender charges, and withdrawals before 59½ may also face a 10% additional tax.
- Guarantees depend on the financial strength and claims-paying ability of the issuing insurer, and annuities aren’t FDIC insured.
In California, buyers 60 and older get a 30-day free look to return an annuity for a full refund (California Department of Insurance). An FIA isn’t right for everyone, especially people who need their money soon or want full market upside. Under California’s annuity best-interest rules, any recommendation has to fit your goals, finances, and timeline, and before you decide, you’ll get a written disclosure explaining what’s being recommended and how your agent is paid.
Not sure which of these fits you?
Retirement rules that sneak up on you
Retirement has its own calendar. The IRS says required minimum distributions (RMDs) from traditional IRAs and most workplace plans generally begin at age 73, or 75 if you were born in 1960 or later, and a missed RMD may face a 25% excise tax, or 10% if corrected within two years.
A timeline you can see
Picture your key ages mapped out ahead of time:
| Age | What happens | Source |
|---|---|---|
| 50+ | Catch-up contributions to 401(k)s and IRAs become available (the IRS updates the limits each year) | IRS |
| 55 | If you leave your job during or after the year you turn 55, distributions from that employer’s plan may avoid the 10% additional tax | IRS |
| 59½ | The 10% additional tax on early distributions generally no longer applies | IRS |
| 60–63 | A higher 401(k) catch-up limit, if the plan allows it | IRS |
| 62 | The earliest age to start Social Security retirement benefits, at a reduced amount | SSA |
| 67 | Full retirement age for people born in 1960 or later | SSA |
| 70 | Social Security benefits stop increasing from delayed retirement credits | SSA |
| 73 or 75 | RMDs generally begin at 73, or at 75 if you were born in 1960 or later (workplace plan participants who are still working may be able to delay, unless they own 5% of the business). Roth IRAs have no RMDs for the original owner. | IRS |
Hi, we’re Nancy & Mario
We help families protect what they’ve worked so hard to build. We’re licensed insurance agents with the California Department of Insurance, and Mario is also licensed in other states. When a question calls for a tax professional or an attorney, our job is to make the first step easy and introduce you to the right expert.
Common questions
Do I have to move my old 401(k)?
Not necessarily. Depending on your former plan’s rules, you may be able to leave it there. It’s worth knowing your options and making a choice on purpose.
Will I owe taxes if I roll over?
According to the IRS, when you roll over a retirement plan distribution, you generally don’t pay tax on it until you withdraw it from the new plan or IRA. Rolling pre-tax money into a Roth account is a different case, because the converted amount is generally taxable.
Can I move my Roth IRA without losing its tax benefits?
Generally, yes, if it moves to another Roth IRA, including one set up as an annuity, through a direct trustee-to-trustee transfer or a 60-day rollover (IRS). It keeps its Roth status, and the five-year clock doesn’t restart. A Roth IRA can’t be rolled into a traditional IRA or an employer plan.
Should I take the pension lump sum or the monthly check?
It depends on your health, your spouse, your other income, and how comfortable you are managing money, factors PBGC and the CFPB suggest weighing. A pension offers steady lifetime income; a lump sum offers flexibility but makes it your job to make it last. If you’re married, your spouse generally must consent in writing to give up the survivor benefit.
Can I lose money in a fixed index annuity?
Not from market drops alone. But surrender charges, rider fees, a market value adjustment (if your contract has one), and early withdrawals can reduce your value, and FINRA notes that surrendering too soon can mean losing some principal. Guarantees depend on the issuing insurer’s claims-paying ability.
What’s an income rider?
It’s an optional feature, often for an added fee, that can pay you income for life, even if your account value runs out (NAIC). The income base some riders grow while you wait is used to calculate that income; it isn’t cash you can withdraw.
What’s an annuity bonus, and what’s the catch?
Some contracts add a bonus when you buy or add money. The NAIC notes you could lose it if you withdraw within a set period, and FINRA and the SEC caution that annuities with bonus credits can carry higher expenses that offset the bonus, sometimes along with a longer surrender period. Compare the whole contract, not just the bonus.
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