Keith's Note: "Deciding whether to defer your retirement benefits is more than a timing decision—it’s a strategy that can meaningfully impact your taxes, long-term income, and overall Real Wealth. Understanding how 401(k) and pension payouts work at Pantex allows you to align benefit timing with your broader retirement plan. This guide will help you think through the trade-offs so you can make informed decisions that support the lifestyle you want in retirement." - Keith Demetriades, CFP®, CKA® | Financial Advisor Specializing in Pantex Retirees.
Can I Defer My Pantex Benefit Payments?
Timing when and how you access your retirement benefits is an important part of maintaining your preferred lifestyle while also growing your Real Wealth. In some cases, it may be beneficial to delay receiving your benefits beyond the day you retire to maximize your total earnings and/or minimize your tax liability.
Each of these options should be analyzed in coordination with your other retirement assets.
Deferring Your 401(k) Savings Plan Payouts
Choice to Defer: When you leave the company, you may request an immediate payout or choose to defer payment
Investment During Deferral: If you choose to defer payment, your savings will remain invested in the 401(k) Plan funds according to your direction.
Mandatory Commencement: Under IRS required minimum distribution (RMD) rules, you may not defer payment beyond April 1st of the year following the year in which you reach age 70 1/2 or the date you retire if you work for the company beyond age 70 1/2. Roth contributions and earnings are also subject to this rule unless rolled over into a Roth IRA.
Small Balance Exception: If your vested account balance (excluding rollovers) is less than $1,000 when you leave, the entire balance will be distributed to you in a single lump sum payment.
Deferring Your Pension Plan Payments
Vested, Terminated Employee (Y-12 Plan): If you are vested (at least five years of Credited Service) but leave before you are eligible for a full pension benefit, you may postpone payments to reduce or eliminate the reduction factor.
Vested Benefits Payable at Age 65: Vested pension benefits normally become payable at age 65 (Normal Retirement age).
Early Reduction: While you can elect to receive a reduced benefit as early as age 50, choosing to defer payments delays the commencement date and reduces the early retirement penalty.
Working Past Age 65: Active Employees who attain age 70 1/2 may commence a pension benefit while continuing employment. This benefit is payable beginning with the earlier of the month following the month in which you retire, or the month following the month in which you attain age 70 1/2 (for Y-12 and Pantex Non-Bargaining Plans), or April 1 following the calendar year during which you reach age 70 1/2 (for Pantex Metal Trades Council and Pantex Guards Union Plans).
Real Wealth Questions
Should you defer your pension or 401(k) distributions to delay taxes or increase future income?
What are the implications of deferral on RMDs and tax brackets?
Will deferral affect the survivor benefits you chose?
Do you have any health concerns (including family history) that could affect your retirement timeline and the optimal timing of your benefits?
What To Do Next
If you’re considering delaying your 401(k) or pension payments, start by reviewing your full retirement picture—including income needs, tax exposure, and other assets—to understand how deferral affects both short-term cash flow and long-term growth. Then connect with Keith Demetriades, CFP®, CKA®, to evaluate your options, plan around RMD rules, and determine a timing strategy that best supports your Real Wealth in retirement.
