How Are Benefits from Corporate Retirement Plans Paid?The amount of benefits you receive from a corporate retirement plan depends on when you begin your distributions. The normal retirement age is the age at which full retirement benefits are payable. This age is typically 65. If you wish to withdraw your benefits earlier than the normal retirement age, you will most likely receive a reduced amount. Some corporate retirement plans do provide for certain early retirement benefits. The early retirement age generally starts at 55.
You have several options for receiving your retirement benefits. These include the following:
- Lump sum. This is a one-time payment of your benefits at retirement. Lump sums can be subject to additional taxation.
- Single-life annuity. You receive equal periodic benefit payments (monthly, quarterly, etc.) for the rest of your life.
- Joint and last survivor annuity. Annuity payments are continued to your spouse after you die. The payment must be at least 50 percent of the periodic amount you received during your lifetime.
- Survivor's benefits. If you die before you receive your benefits, all your benefits will automatically go to your surviving spouse or other named beneficiary (with your spouse's written consent).
Benefits received before age 59½ must be received as annuity payments to avoid the 10 percent early withdrawal tax penalty. There are many things to consider before deciding on a distribution method. Research all of your options carefully.