Retirement is a major milestone—and for many retirees, one of the most important questions is: “What should I do with my profit sharing plan after I retire?” Whether your profit sharing balance is modest or substantial, the decisions you make now will directly affect your long-term financial security.

A profit sharing plan is one of the most valuable workplace retirement benefits. It offers tax-deferred growth, employer funding, and flexible accumulation. But once you retire, you’re responsible for choosing what happens to your money. You can take income, roll it into an IRA or annuity, leave it in the plan (if allowed), or convert it into guaranteed lifetime income.

Before making any decisions, it’s helpful to review how your plan works. If you need a refresher, visit: How Does a Profit Sharing Plan Work?

From preserving tax advantages to generating guaranteed retirement income, this guide explains every option available—and why many retirees choose annuities for safety, stability, and protection against market downturns.

What Should I Do With My Profit Sharing Plan After I Retire?

Once you retire, you generally have several choices for what to do with your profit sharing plan money. Each option has different tax implications, risk levels, and income benefits. Choosing the right strategy depends on whether you want growth, protection, guaranteed income, or maximum flexibility.

1. Leave the Money in the Profit Sharing Plan (If Allowed)

Some employers allow retirees to leave funds in the plan indefinitely. This may be an option if:

• You want to postpone making decisions until markets stabilize.
• You are satisfied with the plan’s investment choices.
• You want to delay Required Minimum Distributions (RMDs) until age 73.

However, there are drawbacks. You’re limited to the investment menu inside the plan, you cannot add new contributions, and you lack control over distribution methods. Many retirees eventually roll their balance into an IRA or annuity for more flexibility and stronger protection.

2. Roll Your Profit Sharing Balance Into an IRA

This is one of the most common retirement moves. A direct rollover keeps your funds tax-deferred and avoids penalties. Once in an IRA, you gain access to a wider range of investment options.

But there’s also increased exposure to market risk. Securities-based IRAs can grow over time—but they can also lose value, especially during market downturns early in retirement. This risk is why many retirees move at least part of their balance into an annuity.

3. Transfer Your Profit Sharing Plan to an Annuity

Rolling your profit sharing plan into a fixed annuity or fixed indexed annuity provides:

• Principal protection—your balance cannot lose value due to market declines.
• Tax-deferred growth—just like inside the plan.
• Guaranteed income options—you can turn savings into a personal pension.
• No loss during market downturns—important for retirees on a fixed income.

For step-by-step instructions, see: How to Transfer a Profit Sharing Plan to an Annuity

Retirees often choose annuities because they want protection, predictable growth, and contractual guarantees that investment accounts cannot offer.

4. Use a Bonus Annuity to Maximize Income

Some retirees choose a bonus annuity when they want:

• A boost to their income benefit base
• Enhanced lifetime income payouts
• Higher fixed growth potential

You can compare the best bonus annuities here:

5. Take Cash Distributions (Taxable)

You may withdraw your entire balance as a lump sum—but the tax consequences can be severe. Entire distributions are taxed as ordinary income, which can push you into a much higher tax bracket. Most retirees avoid this option unless they have a specific need for immediate cash.

6. Take Partial or Scheduled Withdrawals

This option provides flexibility, but it also exposes you to sequence-of-returns risk. If markets decline while you’re withdrawing money, your balance can shrink dramatically.

To avoid this, many retirees split funds between an investment IRA and a fixed or indexed annuity—creating both growth opportunity and guaranteed lifetime income.

Using an Annuity for Lifetime Income

Annuities are one of the strongest tools for creating predictable retirement income. Whether you choose a fixed annuity or an indexed annuity with an income rider, your income can be guaranteed for life.

Use the calculator below to estimate your income:

Should I Keep My Money in Investments or Choose Guarantees?

The decision depends on your goals. Investment accounts offer long-term upside, but they also carry risk—especially dangerous in early retirement. Annuities protect principal and can provide income you cannot outlive.

Most retirees choose a combination of the two:

• Growth bucket: traditional investments for long-term upside
• Safety bucket: fixed annuities or MYGAs for guaranteed accumulation
• Income bucket: fixed indexed annuities with lifetime income riders

This blended approach helps ensure both growth potential and security.

Get a Personalized Profit Sharing Plan Review

If you want help choosing the right direction for your profit sharing balance, you can request a retirement analysis below.

Related Pages

• How Does a Profit Sharing Plan Work?
• How to Transfer a Profit Sharing Plan to an Annuity
• How Do Annuities Earn Interest?
• Best Retirement Income Annuities
• Today’s Best Annuity Rates