Should you place your IRA or 401k into an annuity? At Esure Annuity, we know this is a question many Phoenix residents have.
Whether you are considering an IRA rollover or 401k rollover, youe decision of where to place your hard earned savings is an extremely important one. You desire financial security for the future, and hope to have a sustainable income that provides you with financial security for the rest of your life. With those priorities, many retiring professionals are questioning the value of mutual funds and ETFs considering the stock markets at all time high’s and interest rates at all time lows. In order to protect principal and lock in long term income at higher rates, many people are choosing annuities for their IRA or 401k rollover. With the correct annuity for your situation, you can finally have the security, flexibility, and income you seek, or simply own a quality asset to protect what you’ve worked hard to accumulate. The last thing you need is for a market crash to take away years of accumulation in a few weeks, as in 2008. You will find many surprising advantages in rolling an IRA or 401k account over to an annuity. Mainly, peace of mind and ease of transfer. There is no need to cash in your current plan. It is a simple tax exempt transfer.
Ultimately, those who are approaching retirement age want to enjoy a stress-free life in terms of financial security. There are various financial tools designed for retirement investing, however none except an annuity are capable of guaranteeing a continuous, reliable, sustainable income that is funded for your entire life by a reliable insurer. There are no mutual funds or ETFs that can guarantee your principal and pay income of five to seven percent for life. But the right annuity can do just that.
In the past, retired investors were forced to ride out the markets and often experienced problematic declines in principal when beginning to withdraw for income. If you hit a bad sequence of returns, your money can deplete in as little as 20 years. You can instead roll your account over into a variable, immediate, fixed, or Hybrid index annuity. Variable annuities however, do not protect your principal and incur fees that many find unacceptable. At Esure, we do not recommend variable annuities.
Choosing to rollover 401k or IRA money into an annuity is essentially moving your money from its current trustee to another trustee, considered a “direct” rollover or transfer. For this reason, you will not be taxed on the transfer, however will be taxed on the monthly income received.
Younger than 59 1/2 years of age?
Individuals who withdraw money from a 401k or IRA plan generally face a 10% federal penalty tax when younger than 59 1/2. However, by rolling your 401k or IRA over into an immediate annuity that has a “life contingent” payment option, you can avoid this penalty tax by choosing to receive the income over the course of your lifetime, or the lifetimes of both yourself and your spouse. This is not the case if you choose an annuity in which you receive payments over a specified term, or number of years.
When considering an IRA or 401k rollover, it is critical to thoroughly understand all of your options. It is your financial future you are planning, so choosing the right type of annuity is vital. Our staff uses research on up to 2700 annuities, and rejects more than 98 percent. Our clients get only the top tier of the annuity ladder. We work for our clients as fiduciaries. At Esure Annuity, our goal is to help those who are planning for retirement, or who want to know more about rolling investments over into annuities make smart life choices. Give us a call today!
