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The boomers’ biggest impact will be on eliminating the term ‘retirement’ and inventing a new stage of life. — Rosabeth Moss Kanter, American Author, 1943.

Almost two-thirds of women are in the workforce today in sharp contrast to back in 1950 when only one-third of the workplace consisted of women. One half of all stock market investors are women.

Baby Boomer women are expected to outlive their male counterparts by an average of 15 years. So, if you’re en route to retirement or you’re changing jobs, there are important decisions you need to make — sooner than you may think.

This question is equally relevant whether you are male or female; how will you preserve the retirement funds you’ve accumulated over an entire career to provide the income stream you will need for your future? There are several options to consider that can help you protect the security you’ve earned from unnecessary or untimely income tax treatment.

What decisions need to be made?

Do you want the money now? If you want to take all or part of your money in cash, you will pay ordinary income taxes — and probably a 10 percent penalty — on whatever potion is not rolled directly into an individual retirement account or another employer’s plan.

Do you want to pay the tax later? If you want to keep deferring taxes and maintain control over your money, you can transfer your accumulated assets directly from the current plan into an IRA.

Do you want to pay a one-time tax today? If you want to take advantage of the Roth IRA and ultimately withdraw your money tax-free, you must first roll over the assets from your employer’s plan into a traditional IRA.

Your individual circumstances will determine which option is right for you. Be sure to review your own personal situation before making a decision regarding your distribution. Take the time to understand your individual needs and objectives to make sure you implement the appropriate strategy.

If you want to take the money now it will cost you. By law, 20 percent will be withheld toward federal income taxes. So right away, you’ll have lost the use of one-fifth of your retirement assets. If you are not at least age 59.5, disabled, or leaving your job after the age of 55, you are subject to an additional 10 percent federal tax as a premature withdrawal penalty.

State taxes may also apply.

To defer all taxes until later and avoid any current taxes, you must have your retirement plan money transferred directly into an IRA (referred to as “direct rollover”), leave it in your former employer’s plan or transfer it directly into a new employers plan. It’s important to understand the distribution options and procedures of your former employer’s plan. If you want to avoid the 20 percent withholding tax, you must specifically request a direct rollover. The withholding tax is required if you physically take possession of the distribution amount, even if you intend to roll it over to an IRA.

The benefits of an IRA Rollover are that no current taxes due on the rollover amount and the assets continue to grow tax-deferred in the IRA. If you do not elect a direct rollover, 20 percent will be withheld upon distribution. You can still avoid taxes on the distribution by rolling over to an IRA within 60 days of receipt of your distribution. Also, stock received in a distribution can be rolled over, or can be sold and the proceeds of the sale can be rolled over. If you’d like to pay the tax now and have tax-free distributions later consider a Roth Ira. The Taxpayer Relief Act of 1997 introduced the Roth IRA. The investment in a Roth IRA grows tax-free and is distributed tax-free under certain circumstances.

A distribution from a qualified pension or profit sharing plan may not be rolled over into a Roth IRA. However, an individual can roll over a distribution from his or her employer’s qualified plan into a traditional IRA and then elect to convert or roll over that IRA into a Roth IRA.

The advantage to this strategy is that after the tax is paid on the initial distribution from the IRA, there is no further tax, as long as the money stays in the Roth IRA a minimum of five years and the person reaches age 59.5, dies, becomes disabled or the money is used for a qualified first-time home purchase ($10,000 lifetime maximum).

Distributions from a traditional IRA may be rolled over or converted to a Roth IRA if an individual’s adjusted gross income (AGI) is not more than $100,000 (same for married or single) in the year of the rollover conversion. An individual can choose to roll over or convert any portion of his or her traditional IRA to a Roth IRA.

The distribution amount is treated as ordinary income, but is not included as income for purposes of determining the $100,000 AGI limit. A distribution from a traditional IRA being rolled over or converted into a Roth IRA is not subject to the 10 percent premature withdrawal penalty tax imposed on withdrawals from traditional IRAs before age 59.5.

Next week we’ll look at FAQ frequently asked questions about retirement plan distributions and the terminology and the pros and cons of the various distribution options.

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Darcie Guerin is a financial adviser and branch manager at Raymond James & Associates Inc. at 606 Bald Eagle Drive, suite 401, Marco Island. Contact her at Darcie.Guerin@raymondjames.com, 389-1041 or toll-free (866) 343-0882.