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IRA Annuity: What’s it and how does it work.

Annuities are not the same as IRAs. Both financial tools allow you tax-deferred growth of your money. This means that you won’t need to pay taxes until the money has been withdrawn. If you already have the tax-deferment benefit from your IRA, what’s the point of an annuity?

An annuity in an IRA gives you more flexibility if you plan to work beyond 72. When choosing the right annuity, you should consider your age and life expectancy.

How to use an Annuity within your IRA

The IRS requires you to take out a portion of the funds to tax them. IRAs are known for deferring taxes until you withdraw the money.

An IRA annuity allows for you to invest in retirement savings and also earn tax-deferred income. You won’t have to pay tax on the money you invest in your IRA annuity, until you withdraw. This can help you save significant taxes. Many IRA annuities offer guaranteed payments for life that can provide a steady income in retirement.

Annuity vs. IRA – Which is better for you?

When deciding whether annuity should go inside an IRA, consider your goals. An annuity is not the right choice if your Roth IRA is used only for growth strategies. An annuity can be a good choice if you want security and assurance that you will continue to receive income for the rest your life.

About IRA annuity

Many IRAs allow you defer taxes until you withdraw the funds. The IRS may require that you take out some funds so they can be taxed.

You have many options when it comes to keeping an IRA’s fixed, fixed-indexed, hybrid or variable annuities. Annuities can be tailored to meet your financial goals. This category allows you to choose between a fixed or variable annuity.