As the title says, how does this work ? Does one simply receive what they put in? For example, if a person has 100k when they retire at 67, does the retirement company choose an estimated year of death and divide the 100k by the number of years? Are there levels, for example if you retire with 100k, you receive this amount a month? Are distributions distributed like social security?
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You are thinking of a pension, or defined benefit retirement plan, where you contribute, and your employer contributes, and at retirement age you get a monthly check for the rest of your life. Social security works like this, too. In a 401k, AKA a defined contribution plan, you and potentially your employer contributes, you decide where to invest, and at retirement age you withdraw whatever you want and pay taxes on what you take out. If you die, any remaining balance goes to your beneficiaries after taxes are deducted. There are required minimum distributions imposed on 401 k participants at certain ages , however as the government does not want to wait for ever for its tax revenue.
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