Welcome, retirement! When it finally arrives, what choices do you have in how you receive distributions from your retirement plans?

If you are over age 59 1/2 but have not yet reached your required beginning date, you can take distributions of any amount whenever you like (depending on the plan provisions). But once you reach age 70 1/2 and your required beginning date (for most plans), you must decide how you would like to take out the money you worked so hard and long to save.

You have two basic choices: either you can take a one-time, lump-sum payment of the entire amount in your plan, or you can take a series of payments to meet the annual required minimum distribution.

Some employer retirement plans — for example, defined benefit plans — build the minimum distribution requirement into their strategy. They offer annuities from which you receive monthly or other regular payments that meet your minimum distribution requirement. The annuity is a contract usually issued by a life insurance company that provides payments throughout your lifetime or the joint lifetime of you and your beneficiary (often your spouse). Another type of annuity provides payments for a fixed period called a "term certain."

If you have a different type of retirement plan, such as an individual retirement account, and want to take periodic payments, you can compute them yourself using available IRS tables or with the assistance of a financial advisor. You can take your required minimum distribution as one annualized payment, or you can receive payments monthly, quarterly, or at other intervals.

The distribution plan you choose will have an impact on your retirement income, the taxes you pay, and possibly your estate planning, so it's important to understand your options thoroughly.

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