What Should I do with my 401k after I Retire?
Jason Stolz CLTC, CRPC
Your 401k is often one of the largest financial assets you accumulate over your working years. Once you retire, the question becomes: What should I do with my 401k after I retire? The decision you make can influence your income, taxes, investment risk, and financial security for decades to come.
Whether your 401k is from a private company, government employer, school system, nonprofit, or corporate plan, you generally face four main choices: leave the money in the 401k, roll it into an IRA, convert part of it to a Roth, or roll it into a safe annuity built for guaranteed income. Each option has unique advantages depending on your goals, risk tolerance, health, and how much control you want over your retirement assets.
At Diversified Insurance Brokers, we help retirees nationwide compare their 401k distribution options, evaluate guaranteed income strategies, reduce tax risk, and create a stable retirement income plan that lasts. This guide covers how a 401k works at retirement, the choices you’ll face, and how to make the decision that best protects your long-term security.
Retiring With a 401k?
Compare safe rollover options, guaranteed income strategies, and today’s strongest annuity rates.
View Fixed Annuity Rates | View Bonus Annuity RatesUnderstanding How a 401k Works at Retirement
A 401k is a tax-advantaged retirement account that allows your savings to grow tax-deferred until you withdraw them. At retirement, your choices expand, giving you more control over how you use the money.
For a full breakdown of the structure, you can review: How Does a 401k Work?
Once you retire, you typically have four main options:
• Leave the funds in the 401k plan
• Roll the 401k to an IRA
• Convert some or all to a Roth IRA
• Roll the 401k into a safe annuity for guaranteed income
Your ideal path depends on whether you value safety, flexibility, lifetime income, tax efficiency, or market exposure.
Option 1: Leaving Your Money in the 401k
You may be able to leave your 401k in the employer plan after retiring. This can be beneficial if the plan has low fees or strong investment options. However, there are limitations:
• Limited investment choices
• No guaranteed lifetime income
• Required minimum distributions (RMDs) still apply
• Employer may restrict access or require full distribution later
Most retirees choose to roll their funds out for better control, flexibility, and income options.
Option 2: Rolling Your 401k Into an IRA
This is one of the most common strategies. An IRA rollover keeps your funds tax-deferred and gives you:
• Unlimited investment choices
• More control over risk and allocation
• Lower fees compared to many employer plans
• Ability to consolidate retirement accounts
But IRAs do not provide guaranteed lifetime income unless paired with an annuity.
Option 3: Converting Your 401k to a Roth IRA
A Roth conversion lets you move pre-tax 401k funds into a tax-free Roth IRA. This allows your money to grow tax-free and avoids RMDs later. Roth conversions may make sense if:
• You expect future tax rates to be higher
• You want tax-free income later in retirement
• You want to reduce taxable income for Social Security or Medicare purposes
Many retirees convert gradually over several years to control the tax impact.
Option 4: Rolling Your 401k Into an Annuity for Guaranteed Income
For retirees asking what to do with their 401k after retiring, one of the most valuable strategies is a rollover to a fixed annuity or a fixed indexed annuity. These products protect your principal, grow your money safely, and can provide lifetime income—similar to a pension.
Learn the full rollover process here: How to Transfer a 401k to an Annuity
A 401k-to-annuity rollover can provide:
Principal protection: No market-based losses.
Guaranteed lifetime income: Income riders can match or exceed pension-level payouts.
Full control over beneficiaries: Remaining value goes to heirs, unlike some pensions.
Better surviving-spouse protection: Without reducing your payout like joint-life pension options.
Many retirees use an annuity as the “income engine” of retirement, covering essential expenses while keeping investment accounts untouched during market downturns.
Lifetime Income Calculator
Curious how much guaranteed income your 401k could generate as an annuity? Use the calculator below:
Coordinating Your 401k With Social Security and Other Accounts
Your 401k decisions should align with Social Security timing, IRA distributions, any pension income, and taxable investments. Retirees often use guaranteed income from annuities to cover essential living costs, allowing Roth accounts or taxable investments to grow longer.
This approach reduces risk, stabilizes your income, and protects your portfolio from sequence-of-returns losses.
How Diversified Insurance Brokers Helps With 401k Decisions
As a nationwide independent agency, Diversified Insurance Brokers compares your 401k options and designs safe rollover strategies that match your goals. We help you evaluate payouts, risk, taxes, liquidity, and long-term income needs.
Request Your 401k Retirement Review
Compare rollover options, lifetime income strategies, and safe ways to protect your 401k after retirement.
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FAQs: What Should I Do With My 401(k) After I Retire?
Should I leave my 401(k) with my employer after retiring?
You can, but most retirees prefer rolling funds into an IRA or annuity for greater flexibility, better investment choice, and safer income options.
Is rolling a 401(k) into an annuity a good idea?
It can be, especially if you want guaranteed lifetime income, principal protection, and steady growth. Many retirees transfer part or all of their 401(k) to an annuity through a tax-free rollover.
What are the tax implications when moving my 401(k)?
A direct rollover to an IRA or annuity avoids taxes. Withdrawals later are taxed as ordinary income unless part of the account is Roth.
Can I combine my 401(k) with Social Security?
Yes. Many retirees pair guaranteed annuity income with Social Security to stabilize their retirement budget and reduce investment risk.
How do I avoid running out of money in retirement?
Many retirees use annuities to secure lifetime income while keeping other assets invested for long-term growth.
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
