A finished FIN-355 Topic 4 payout option comparison example, scoring five ways to draw a 600,000 plan balance on tax due, flexibility kept and whether each choice can be undone. Searches like "fin 355 topic 4 assignment example", "fin355 topic 4 sample" and "fin-355 topic 4 example" land here.
What a finished FIN-355 Topic 4 payout option comparison looks like
The finished comparison is one table and the reasoning beneath it, every figure illustrative. Cashing out the full balance adds 520,000 of pre-tax money to a single year's taxable income, pushing much of it into brackets the retiree would never otherwise reach. A direct rollover to an IRA moves the money with no tax at transfer. An indirect rollover sends a check with 20 percent withheld, and unless the retiree replaces that share from other savings within 60 days, it is taxed as a distribution. Leaving the balance in the plan keeps its fees and rules. Spending 200,000 on a lifetime annuity quoted in the case at 1,200 a month creates income that cannot fail and money that cannot come back. The Roth 80,000 is shown as tax-free when withdrawn, provided the qualifying conditions are met.
How a FIN-355 Topic 4 example is structured
The comparison opens with the retiree's facts: age, the balance split between pre-tax and Roth money, other income, and a spending need drawn from the case. A statement of the three tests follows, tax due, flexibility retained and reversibility, since every option is scored on all three. The main table lists the five options as rows and the tests as columns, with a short note in each cell instead of a single mark. Beneath it, a passage works the indirect rollover in dollars, using a 100,000 check that arrives as 80,000. The annuity paragraph describes what the income buys, protection against outliving savings, and what it costs under a life-only contract, a premium that cannot be recovered or left to heirs. A short section says required distributions begin at an age set by statute, which Congress has raised more than once. The recommendation combines options and flags its permanent part.
Three tests applied to five options
Tax due, flexibility kept and reversibility are scored for every option, so a low-tax choice that cannot be undone shows both facts in the same row.
Cash-out income concentrated in one year
Taking the whole balance adds 520,000 of taxable income at once, and the example shows how bunching it lifts dollars into higher brackets than spreading would.
The indirect rollover in dollars
A 100,000 distribution arrives as 80,000 after withholding, and the missing 20,000 becomes taxable unless the retiree replaces it from other savings within 60 days.
The annuity's permanence stated plainly
Income of 1,200 a month is secure for life while the 200,000 behind it is gone under a life-only contract, and the example records both facts.
Required distributions without a fixed age
Distributions must begin at an age Congress sets and has changed, so the example reads that age from the assignment instead of asserting one as settled.
Where marks go in FIN-355 Topic 4
The reversibility column is where comparisons most often fall short: ranking payout options by tax alone can recommend an annuity purchase or a cash-out without ever saying that neither can be taken back. Papers that treat an indirect rollover as equivalent to a direct one miss the withholding and the 60-day window, which is where retirees lose money. Cash-out tax computed at one flat rate understates what a year of concentrated income costs. Roth money taxed as if it were pre-tax, or pre-tax money described as tax-free, confuses the two sources the case keeps apart. Stating a required distribution age as fixed dates the paper, since Congress has moved it more than once and may again. An annuity recommended for its income, with no word on the access and legacy it gives up, is described from one side only.
Get a FIN-355 Topic 4 example written to your instructions
Send the FIN-355 Topic 4 instructions and your classroom rubric, with the retiree case or balances your section assigns. We write a custom example to them, with each payout option scored for tax, flexibility and reversibility, the rollover rules shown in dollars and the permanent parts of the recommendation named, in 24 to 48 hours. The first one is free.
FIN-355 Topic 4 questions, answered
Why is a direct rollover safer than taking a check?
Because the money moves from plan to IRA without passing through the retiree's hands, so nothing is withheld and no deadline applies. A check payable to the retiree carries mandatory withholding, and completing the rollover means depositing the full original amount within 60 days, including the withheld share from other funds. Missing either step turns part of the balance into taxable income that cannot be reversed afterward.
Can an annuity purchase be undone?
Generally not once payments begin under an immediate life annuity. The premium buys income for life and, under a life-only contract, nothing is refunded if the owner dies early. Some contracts add a period certain or a refund feature in exchange for a smaller payment, and a short free-look period may apply just after purchase. The example treats the purchase as permanent and prices it that way.
Can this comparison guide my own rollover decision?
No. The retiree, the balances and the annuity quote are composites, and the tax treatment is described in general terms from rules that change. Your options depend on your plan's terms, your other income, your state and the law in force when you act. The example shows how FIN-355 wants payout options compared; a qualified adviser should look at your actual accounts.