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I am 62 years old, retired and disabled. I need to begin accessing my retirement funds to pay for help at home and for home improvements. My investments are in a mutual fund which has performed very well; but I really need to eliminate risk and receive monthly income. So my plan is to transfer my money to a money market fund. But my current fund group does not offer one.
My basic question is how to do this. Will the bank or investment firm I choose be able to do an electronic transfer without me actually taking possession of the money and it counting as taxable income? About 80% is in a 403b account and rest in a regular investment account. I just want my money moved from one institution to another and then I want to withdraw a certain amount each month to increase my income. I always assumed this would be a seamless process; but after reading explanations at various major fund web sites, I am confused. They mention contacting my plan administrator, receiving a check from current fund, and then depositing it in their money market fund. I am a former NYS employee, who chose to have 16% of my income invested in whatever mutual fund I chose. And when I went on disability, I invested just $100 per month in a separate account, which has grown to $40K. There is no company plan or administrator. Isn’t there a simple and tax free method of accomplishing my goal?
I wouldn't switch it all to a money market fund, especially nowadays- you would probably be just as well off putting your money under a mattress. You can switch some of it into a high yield savings account, I would look for one of the online banks since they pay a lot better interest.
But at 62 you still have plenty of years in retirement (most likely anyway). I would keep some of it in that very good mutual fund, actually probably most of it should be there. There are ways to switch it from your 403b to a Roth IRA which would also trigger a tax event, however the future earnings in the IRA would be tax free.
When you pull the money from the 403b account it will count as taxable income, no way around it. With good planning though you can minimize the tax bite by keeping your total income as low as possible.
I am 62 years old, retired and disabled. I need to begin accessing my retirement funds to pay for help at home and for home improvements. My investments are in a mutual fund which has performed very well; but I really need to eliminate risk and receive monthly income. So my plan is to transfer my money to a money market fund. But my current fund group does not offer one.
My basic question is how to do this. Will the bank or investment firm I choose be able to do an electronic transfer without me actually taking possession of the money and it counting as taxable income? About 80% is in a 403b account and rest in a regular investment account. I just want my money moved from one institution to another and then I want to withdraw a certain amount each month to increase my income. I always assumed this would be a seamless process; but after reading explanations at various major fund web sites, I am confused. They mention contacting my plan administrator, receiving a check from current fund, and then depositing it in their money market fund. I am a former NYS employee, who chose to have 16% of my income invested in whatever mutual fund I chose. And when I went on disability, I invested just $100 per month in a separate account, which has grown to $40K. There is no company plan or administrator. Isn’t there a simple and tax free method of accomplishing my goal?
1. This method is the most common "Direct Rollover" method when the old plan is not an an IRA (ie, 403b, employer pension, etc).
Maybe I just don't understand what a plan administrator is. I simply had 16% of my salary invested in a mutual fund every 2 weeks until I retired on disability. Then I established a second non-IRA account with the same fund. I am simply looking for a way to transfer my savings (all or part) to a money market fund from which I can take a specific amount each month. But I don't want the lump sum counted as income, only the amounts I receive monthly. I need to increase my income to pay for part-time help and modify my home. I assumed this could be done online or by phone with the new fund or bank. Am I correct?
You can roll-over your 403B (or 401K) funds into a self-directed IRA account and do whatever you wish with it. There is nothing to prevent you from pulling-out whatever funds you wish, whenever you wish... as a taxable event.
(Perhaps you are seeking a fixed annuity held in your IRA that will issue you a fixed amount of taxable funds).
I think it's a very bad idea to put it all in a money market account. It's ok to put it in something conservative, but a money market account is actually quite risky if you have all your money in it. It will not keep up with inflation, let alone grow faster than inflation.
A good option would be something like Vanguard Wellesley Income. It's 60% investment grade bonds and 40% dividend paying stocks. In 2008, a really bad year, it lost less than 10%. But it bounced back 16% in 2009. Long term returns have been upwards of 7%. I don't expect it to do that well over the next decade, but 5% seems a reasonable expectation.
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