I want to convert several 401K's into monthly income stream, without affecting principal. What's best option?

Question

I want to combine five different 401K's into one vehicle, without paying income tax on the whole amount because of the conversion, and I want to be able to tap into the interest/growth on a monthly basis, without affecting the principal. What are the best choices?

Answer 1

Are you already taking distributions? You can roll them all into one IRA account. If you have investments that provide enough income so you don't need to diversify - you do nothing, otherwise you can purchase bonds that will provide more income than growth.

You cannot convert the account to a Roth IRA (or a standard brokerage account) without tax consequences.

Answer 2

You can roll them all into a qualified IRA plan. I would recommend a large reputable firm like Fidelity, Schwab, etc. They will give you the most funding options.

How much money do you have? If you have over $500k, you may be able to get an independent financial advisor to take you on as a client. If so, they can make investment decision for you.

If not, you should look for income bond funds, or even perhaps growth and income funds that have a high yield dividend portfolio.

You should not be taking on a lot of risk if you are in retirement though. Stick to conservative and steddy performance funds.

Answer 3

If your conversion involves any sales ,
Then gain is realized and taxes will incur .
(although inside a 401K may have different rules)

For % , I actually go with several of the Canadian Energy trusts ( PWE HTE ERF PGH & BPT ) that pay good dividends .
(However , the pricipal varies as it is an equity
And the stock market IS a roller coaster )

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