If you're retiring from Lincoln Financial, you have three retirement planning choices to weigh: deferred comp, your 401(k), and Social Security. Each is taxed in its own way. Deferred comp payouts are often locked in early. The order you tap them can affect your taxes for years.
If you spent your career at Lincoln Financial (Lincoln National, headquartered in Radnor, Pennsylvania), your retirement income will not arrive from a single account. It comes from several at once: your 401(k), a nonqualified deferred compensation balance, any company stock or equity awards you still hold, Social Security, and possibly a frozen pension benefit from Lincoln National. Each follows its own tax rules, and the order you draw from them can affect how much you keep.
The real work of Lincoln Financial retirement planning is lining these pieces up before you set a retirement date, not after. Some of the most consequential choices, especially around deferred comp, are made years ahead of time and are difficult to undo. The sections below walk through what to coordinate and when.
##CTA-BLOCK-1##What Are You Actually Coordinating When You Leave Lincoln Financial?
Think of your retirement income as several streams that turn on at different times and get taxed in different ways. For a long-tenured Lincoln Financial employee, the common pieces are:
- Your 401(k). Pretax and possibly Roth balances, plus any employer match. This is usually the largest liquid account and the most flexible at separation.
- Nonqualified deferred compensation. Salary or bonus you chose to defer. It pays out on a schedule you elected earlier, and it is taxed as ordinary income when it lands.
- Company stock and equity awards. Lincoln National (LNC) shares, restricted stock, or vested awards you still hold. These carry their own capital gains and concentration questions.
- Social Security. A benefit you can start anywhere from age 62 to 70, with the monthly amount rising the longer you wait.
- A pension, if you have one. Lincoln froze its traditional pension years ago, so some employees hold a frozen or cash balance benefit that provides a defined payment backed by the plan sponsor’s obligation.
None of these is hard to manage alone. The difficulty is that decisions about one ripple into the taxes on another, often in the same year. That is the argument for coordinated retirement income planning rather than account-by-account guesswork.
Your Deferred Comp Election Is the Piece That Locks in Early
Nonqualified deferred compensation is where Lincoln Financial employees have the least room to maneuver late in the game. Under the federal rules that govern these plans (Section 409A), you generally choose your payout form, a lump sum or installments over a set number of years, at the time you defer the money. Changing that schedule later is restricted: a new election usually has to be made at least twelve months in advance and push the start date out by at least five years. In practice, the choice you made years ago tends to be the choice you live with.
That matters because deferred comp is taxed as ordinary income in the year it pays out. A lump sum landing on top of your final year of salary can stack into the highest brackets, expose more of your investment income to the 3.8 percent NIIT, and raise your Medicare premiums through IRMAA two years later. Installments spread the same dollars across several years and can keep more of the income in lower brackets. Neither is automatically better; the right answer depends on your other income in those years.
There is also a risk worth naming plainly: deferred comp is an unsecured promise from the company, not money held in your name. If the employer were to face serious financial trouble before paying you, those balances could be at risk. That is not a prediction about Lincoln, it is a structural feature of every nonqualified plan, and it is one reason large deferred balances deserve a second look as you approach retirement.
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How Should You Sequence Withdrawals to Manage Taxes?
Once you stop working, you gain something you did not have before: control over which dollars you recognize as income each year. The years between your last paycheck and the start of required minimum distributions (currently age 73, moving to 75 for younger savers) are often the lowest-income years of your life. They can also be the most valuable for planning.
In a low-income gap year, partial Roth conversions or strategic withdrawals from pretax accounts may let you fill up a lower bracket on purpose. In a year a large deferred comp payout arrives, the opposite is usually true: that is rarely the year to convert anything. Mapping income year by year, rather than reacting to it, is the heart of a sound retirement withdrawal sequence.
What About Your 401(k) and Company Stock?
When you separate from Lincoln Financial, your Lincoln Financial 401(k) does not have to move. You have choices: leave it in the plan, roll it to an IRA, or roll it into a future employer plan. An IRA can widen your investment options and simplify withdrawals. Staying in the plan may preserve certain creditor protections and institutional pricing, though plan fees and retail IRA costs can differ and deserve a side-by-side look. The trade-offs are real on both sides, which is why it helps to weigh them before rolling your 401(k) into an IRA.
If you hold Lincoln National stock inside your 401(k), there is one wrinkle worth flagging: net unrealized appreciation, or NUA. Moving highly appreciated company stock out in kind, rather than rolling it to an IRA, can let you pay long-term capital gains rates on the growth instead of ordinary income. It can be powerful when the cost basis is low, and it can be the wrong move when it is not. This is a calculation, not a rule of thumb.
Don’t Forget Social Security Timing
Social Security is the one income stream you can shift on your own simply by choosing when to claim. Waiting from 62 toward 70 raises the monthly benefit through delayed retirement credits, and for many households delaying the higher earner’s benefit can strengthen survivor income later. Claiming also interacts with your tax picture: in years you are pulling deferred comp or doing Roth conversions, the timing of when you claim Social Security can change how much of your benefit is taxed. It belongs in the same conversation as everything above, not in a silo.
A Lincoln Financial Retirement Planning Checklist
Pulling it together, a short Lincoln Financial retirement planning checklist for the year or two before you leave might look like this:
- Confirm your current deferred comp distribution election and the exact year or years it pays out.
- Estimate your taxable income in each of the first several retirement years, including any lump sum.
- Decide whether gap-year Roth conversions fit, and which years to avoid them.
- Choose what to do with your 401(k), and run the NUA math if you hold company stock.
- Set a target Social Security claiming age and test how it interacts with the rest.
- Build a withdrawal order across taxable, tax-deferred, and Roth dollars, then revisit it yearly.
None of this requires perfect foresight. It requires a plan you can adjust as the numbers come in. Our approach to that work is summed up in three words we hold ourselves to: Preserve. Strengthen. Grow.™
##CTA-BLOCK-2##Getting Started with Holland Capital Management
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Frequently Asked Questions
When Should I Make My Lincoln Financial Deferred Comp Distribution Election?
The first election generally happens when you choose to defer, often years before retirement. Because later changes are tightly restricted, it is worth reviewing your existing election well ahead of your retirement date so the payout year does not collide with other income.
Can I Change My Deferred Comp Payout Schedule After I Elect It?
Sometimes, but the rules are strict. A change usually must be made at least twelve months in advance and push the payout start out by at least five years. That is why the original election tends to drive your planning rather than the other way around.
What Happens to My Lincoln Financial 401(k) When I Retire?
You can typically leave it in the plan, roll it to an IRA, or move it to a new employer’s plan. Each path has trade-offs around cost, investment choice, and creditor protection, so the right answer depends on your full picture rather than a default.
Is a Lump Sum or Installment Payout Better for Deferred Comp?
It depends on your other income in those years. A lump sum can push you into higher brackets and raise Medicare premiums later, while installments spread the income out. Modeling both against your projected income is the only reliable way to compare them.
How Does a Deferred Comp Payout Affect My Medicare Premiums?
Medicare uses your income from two years earlier to set Part B and Part D premiums through IRMAA. A large payout can raise those premiums temporarily, so it helps to know which years your higher income will show up.
Should I Delay Social Security If I Have Deferred Comp Income?
For some households, drawing down deferred comp or pretax accounts first and delaying Social Security can raise the eventual benefit and improve survivor income. Whether it fits depends on your health, cash needs, and tax brackets, so it is worth testing rather than assuming.
Do I Need a Financial Advisor to Coordinate All of This?
You can manage parts of it on your own, but the pieces interact, and a few of them are hard to reverse once set. A fiduciary, planning-first approach to retirement planning can help you test the moving parts together before you commit to a retirement date.
