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have an annuity question?
have an annuity question?

Should you have an annuity in your IRA? How to make the most of your retirement income

While many people love the lifetime income feature of annuities, there are other reasons why purchasing an annuity can make sense – starting with the tax-deferred growth that is allowed to take place in the account. But is it wise to include an annuity in your IRA account?


In addition to providing lifetime guaranteed income, annuities can provide you with a long list of other benefits, too, such as:

  • Penalty-free withdrawals if you become terminally ill or need to reside in a nursing home
  • Death benefit so you can leave a legacy for your loved ones
  • An ongoing, reliable income stream that can continue for the rest of your life, regardless of how long that may be

So, given the tax-deferred nature of annuities, should you or shouldn’t you put an annuity in an IRA (Individual Retirement Account)?

Annuities and IRAs

An annuity can serve as a “complement” to your other retirement income sources, such as Social Security and/or an employer pension plan. Oftentimes, income from an annuity is used for filling in an income “gap” that may be present between what you’ll have coming in, and what you may need in terms of paying your living expenses in retirement.

By purchasing an annuity within a Roth IRA, the money you contribute will be “after-tax” dollars. But unlike the taxable income that is received via a traditional IRA or 401(k) plan, the income that you receive in retirement from an annuity in a Roth IRA will be tax-free. This strategy can allow you to net much more for yourself than if you had to share a portion of the income with Uncle Sam.

In addition, moving money from a retirement account into an annuity can also make sense once you’ve said goodbye to your employer. For instance, when you are ready to convert your retirement savings from a 401(k), IRA, or other tax qualified account into a retirement income stream, “rolling over” those funds to an annuity can give you a guaranteed income stream.

How to Create a Custom All-in-One Retirement Savings and Income Plan

Unlike an IRA or a 401(k) retirement account, there are no annual contribution limits with an annuity. So, if you’re looking for a way to increase your tax-deferred savings, an annuity can provide you with a viable solution. This is particularly the case if you have already “maxed out” your IRA and other retirement plan annual contributions.

Then, when you’re ready to start taking income, an annuity will typically provide you with a number of options, such as receiving incoming cash flow for a set number of years, or even for the rest of your life.

But with thousands of different annuities available in the marketplace today, how do you know which one is right for you – or even IF an annuity should be included in your portfolio? The best way to determine this is to work with an annuity specialist.

At Annuity Gator, our mission is to educate individuals, couples, and families on the many advantages of including these financial vehicles in an overall financial plan. To learn more about how annuities work, and which one(s) may be a good fit for you, feel free to check out our extensive annuity review database.

If you have any additional questions, or you want to compare multiple annuities and their anticipated long-term performance, you can reach us directly at (888) 440-2468, or through our secure online contact form here.

Should you have an annuity in your IRA? How to make the most of your retirement income

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