5 Mistakes You Can't Afford to Make

You get only one shot at choosing a payout plan.

When it comes to making crucial decisions about retirement payouts, you don't get do-overs. Instead of checking off boxes and signing forms before rushing off to your retirement party, take time to weigh your options. Making mistakes "can be a very expensive learning curve," says Mark Cortazzo, head of Macro Consulting Group, in Parsippany, N.J. Avoiding them can save you thousands of dollars in taxes.

Withdrawing money too soon. If you tap your retirement funds before age 59½, you'll owe a 10% early-with-drawal penalty on top of the federal and state income taxes you'll pay on each distribution. There are exceptions that let you withdraw your money early without a penalty -- but only if you follow the rules.

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Mary Beth Franklin
Former Senior Editor, Kiplinger's Personal Finance