What to do with your 401k upon retirement. Well first things first you are not required to start taking money out of the 401k until you are age 70. So you may take the money out at age 59.5 without consequences but your not required to until 70. So if you left your company and weren't ready to move the money or were happy with the account you could just leave it there for now. Now the other part of your question. Would I put it in an annuity. No, heres why annuities contain large fees and large penalties for withdrawing your money so for these two reasons I personally don't like annuities. So if I had to take the money I would have it sent directly to my IRA account. Why well one i've told you I don't like annuities and two IRA's compared to 401k's have so many choices and usually so many less fees. Where in your 401k you probably have the choice of about 20 funds your IRA company will have 1000 choices. This can seem overwhelming at first but just think how you want your money spread out. How is it spread out now. So what percent goes in each category Small Cap, Mid Cap, Large Cap, Foreign Stock, Bond Funds, REIT's etc. Then buy funds that fit those categories. If you are happy with your diversification now use the same percentages that you have in each of those groups when you move it to your IRA. However remember if you are retiring that you need to be a little less aggressive with your investing. I think you should speak to an investment advisor to see what their advice is for your diversification depending on your age and what type of investments you need. Good Luck.

Just a note - many 401(k) plans will automatically distribute your full balance to you when you retire - they don't permit you to park your money there indefinitely after retirement. Many retirees are surprised when this happens and have to scramble for a suitable investment. That's why it's best to know what you're going to do beforehand, so if your 401(k) custodian is one of those that distributes your money automatically, you can have it transferred to a new custodian, rather than a check to you, which can raise serious tax issues.

IRAs may be a good choice for many people, but they don't guarantee you a lifetime income stream - that is, they cannot promise that you won't outlive your money. Also, most traditional IRAs invest in stocks and bonds. In today's volatile market, such investments might not be so attractive to someone at or nearing retirement age. A 40-year-old can much more easily absorb the loss of 20% of his retirement savings than someone who's 65.

There's no doubt that some annuities have all sorts of fees, but that's not universal - there are annuities out there without fees. It's true that annuities do have those early withdrawal penalties, but everything you put your money into has something that penalizes you for liquidity. Money market funds and savings accounts, for example, don't have "early withdrawal penalties" per se - they just have ridiculously low interest rates. Annuities offer a much greater return, but if you pull out some or all of your money before they mature - which is usually 5 - 15 years down the road, you pay a penalty, which declines over time. The point here is that annuities make sense if you put into them only that money you're reasonably certain you won't need before the annuity matures. Of course, you can convert the annuity to the lifetime income stream at any point, without penalty, after which you get the same monthly check for as long as you live, and if you don't exhaust the original amount, you can have the checks sent to your beneficiary.

I would definitely roll over the money from a 401-K at work into a retirement account at an investment house like Fidelity or Vanguard. I would probably check out their targeted retirement funds, which manage your money and rebalance your mix of stocks, bonds and cash as you get closer to retirement. I think the stock market offers a higher return than an annuity (although at more risk, of course), and from where I am sitting I am willing to tolerate some risk.

Marzipan, over the past 15 years, equity indexed annuities have outperformed every other investment available to people in the US. In a consistently bull market, stocks are a better investment (including mutual funds), but in the kind of volatile market we've seen since the mid-1990's, the risk to retirees of such investments could result in the loss of a significant portion of their portfolios, although your suggestion of rolling the funds into retirement accounts at Vanguard or Fidelity is excellent. Not knowing the extent of your savings, however, I've got to ask how you'd guarantee that you'd never outlive your money.

Well, aggressive saving, maximizing 401-Ks and employer matching, Roth and other IRA instruments---and a rich uncle(!)---are my current plan.

I've heard that an unconscionable percentage of Americans count on anticipated lottery or other gambling winnings to fund their retirement!

I would definately roll it into an IRA and take control of your money.

I would recommend a diversified portfolio of dividend all star stocks. These are stocks that have increased their dividend every year for at least 20 years.

I would start with this list and purchase those with a minimum of a 2% yield. This way you know your income will always be growing.

I'd also stick a portion of it in some higher yielding MLP's such as natural gas pipelines that pay a higher yield but may not necessarily grow that yield as much as the all stars.

This will give you a growing income portfolio with the upside of any stock price increases.

Roll it over into an IRA to avoid penalties of early withdrawal. I would invest in a low cost, low maintenance fund. Probably from Vanguard as their costs are very low and have enough offerings to keep me happy and diversified.

I'd roll the money over into an IRA but would look into putting together a portfolio of ETF's ( Exchange Traded Funds ) . I've been investing with these starting in the mid 90s and have been seeing some decent returns. Part of this is due to holding steady since 2008.

One other great thing about ETFs, it's possible to do a "wash" sale without penalty, both iShares and Vanguard offer almost identical products and it's possible to wipe out losses by moving between similar funds.

Finally I'd balance between between growth value and bonds very conservatively in order to preserve capital. My over goal would be to withdraw 3% a year to live off of while growing the portfolio 4-5%.

This might be a disruptive answer but I would put half of it into Apple stock for at least a month because the stock will continue to rise and let it rise for a month then sell all your shares then put half of it on a CD and then save it on the bank or go traveling.

I have to admit, I had not heard that many 401(k) plans lump out the payment when someone retires. Indeed, I've never seen it happen unless the taxpayer requested it. Perhaps it depends on the size of the company.

I'd roll it into an IRA. I have both a traditional and a Roth, and depending on the rest of my tax situation, would probably split the funds between the two. All my IRAs are self-directed, and I've had fair success with them. I've seen too many annuities and managed accounts that lost money to put much faith in others' management of my funds.

I also maintain a portfolio outside of retirement plans. I don't want to rely solely on funds that I might not have immediate access to.

Dealing with retirees, I learned that nearly all that had 401k or 403b plans had to cash them out upon leaving the company, whether due to retirement or simply changing employers.

With the trend toward longer and longer lifespans, and the current trend of embarrassingly low interest rates, I've got to say I don't see how dumping everything into an IRA -- the majority choice here -- and then drawing it down as necessary is going to guarantee that the money will last, unless you're starting out with a million dollars or better.

Reader, I assume that the annuities you've seen lose value are variable annuities. There are other kinds of annuities, though, that guarantee against loss and even guarantee a competitive return.

gnova, I can understand the desire to exploit Apple's runup in value, but things happen - I'd recommend not putting so much into what's really a speculative investment upon retirement.