Different 401(k) custodians will have different distribution options available to participants in retirement.
After you retire, you have at least two disbursement options: lump-sum distribution and periodic distribution. If you take a lump-sum distribution that is not bound for an IRA, you will incur a significant tax bill, since all 401(k) distributions are taxable.
Periodic distributions may mean that every so often you can choose an amount to be paid out to you on a quarterly basis, for example, while your investments remain intact and you attempt to accrue more interest on your money.
Many custodians will also give a guaranteed lifetime income option, which uses part or all of your balance to fund an annuity product designed to have a competitive payout and to last as long as you or you and your spouse jointly live. Many retirees roll their funds out so that they can be repositioned for retirement income strategies without having to worry about what is offered within the 401(k).
Be aware that when you turn 70 ½, you will be forced to take Required Minimum Distributions from your 401(k)s and IRAs, which is a different percentage for each attained age. A relatively new law permits the use of 25% of your qualified money or up to $125,000, whichever is less, to fund what’s called a QLAC (Qualified Longevity Annuity Contract), which is basically a deferred income annuity that allows you to avoid taking RMDs on part of your assets.