Generally, annuity contracts have fees and expenses,
limitations, exclusions, holding periods, termination provisions, and terms for
keeping the annuity in force. It is important to understand that purchasing an
annuity in an IRA or an employer-sponsored retirement plan provides no
additional tax benefits than those available through the tax-deferred
retirement plan.
Annuity guarantees are subject to the claims-paying ability
and financial strength of the annuity issuer.
| | Can You Satisfy the RMD Rules with the Purchase of an
Annuity Contract?
Your purchase of an annuity contract with the funds in your
IRA or retirement plan satisfies the RMD rules if all of the following are
true:
- Payments are made at least yearly
- The annuity is purchased on or before the date that
distributions are required to begin
- The annuity is calculated and paid over a time period that
does not exceed those permitted under the RMD rules
- Payments, with certain exceptions, do not increase
If you participate in a 401(k) (or similar plan) or an IRA,
you may also be able to use up to $200,000 to purchase a qualifying longevity
annuity (or QLAC). The value of the QLAC is disregarded when you calculate the
amount of RMDs you are otherwise required to take from your account each year.
Payments from the QLAC can be delayed up to age 85, and are treated as
satisfying the RMD rules when paid. The rules can be complicated, and QLACs are
not right for everyone, so be sure to consult a qualified professional for
further information.
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