Posted by In retirement planning, we often face a question: Can I transfer funds from an IRA or 401k into an annuity without paying taxes?The answer is yes.In this article, the founder of TheLifeTank.comHeather Xiong CFP®️, will explain this process to you in detail.
Question 1: Can I use funds from my 401k, IRA, or 403(b) account to purchase an annuity?
heather: Can.Whether it's an IRA, 401(k), 403(b), or lump sum pension, you're free to move those funds into an annuity insurance account.
An annuity purchased with IRA or 401k funds is considered a "qualified" annuity plan, allowing the insurance company to create an "IRA annuity" for you into which you can directly deposit your retirement funds.
If you do not have an individual retirement account or 401k, 403(b) retirement benefits, you can also directly apply to open an "IRA annuity" account to save money for retirement.
Question 2: If I decide to transfer money from an IRA, 401k, or 403(b) to an annuity insurance account, will I be taxed or pay a penalty?
heather: will not.When you purchase an annuity with funds from an IRA or 401k account, the insurance company will first create an IRA account to receive the funds you transfer.
Transfers from one retirement account to another are considered "parallel transfers" and have no tax consequences.
You don't have to pay taxes and penalties on transferring funds to purchase an annuity.
Question 3: How do I find annuity quotes and purchase an annuity?
heather: You can use this website's "Retirement annuity self-service quote"Service, it is very simple to purchase a retirement annuity with IRA or 401k funds.
Your first step is to use the "Annuity self-service quote"system,In the "Funding Source" column, select "IRA," or "401k," "403(b)," or "Roth" account.We will provide you with a free annuity quote based on your age group and by screening the latest interest rates in the market.After receiving the quotation, if you have any questions, you can have a free consultation through the online appointment system.
When you are ready to apply for an annuity, I will send you the company's annuity application form and IRA or 401k transfer authorization form.We will help you complete all necessary documentation.
Once the insurance company receives your application, it will begin the funds transfer process by sending your signed funds transfer authorization to your current IRA/401k custodian.All your funds are transferred directly from the old financial custodian institution to the new annuity insurance institution and will not pass through the hands of others.After a few days, the agency will send the funds to the insurance company as the premium amount.The insurance company will then issue and deliver the corresponding annuity insurance to you.As your insurance financial advisor, I will guide you through the entire process.This service is provided free of charge.
Question 4: Now that the Federal Reserve is raising interest rates, can I "lock in" the annuity interest rate or lifetime pension amount in the quote? Heather: Many insurance companies offer a "rate lock period."The interest rate is locked when the application form is submitted, and generally can be maintained as long as the fund transfer is completed within a certain period of time and the annuity is underwritten.Interest rates have changed rapidly in the past two years, with new interest rates updated every month, so locking in interest has become more urgent.Once the insurance company receives and confirms all required application forms, it enters the "interest rate lock" period, which is different from locking in interest on a loan to buy a house.
Question 5: My funds are currently in a 401(k) account.How to switch to an annuity account?
heather: It depends on what you plan to do.In addition to the previous method, you can also contact the company HR directly and ask them to issue a check directly to the insurance company.If the company cannot send your check directly to the insurance company, it will be sent to your home address.
The check is made payable to the insurance company, so it is still considered a "parallel transfer" and is tax-free.At this time, just send the check to the insurance company along with your annuity number.
Around May 5 of the following year, you will receive a Form 15 from your insurance company confirming that the funds from the check were invested in your IRA annuity account.
(>>>Related reading:How do I transfer my 401k out if I quit my job and change jobs? ｜4 ways to deal with old company retirement accounts and a comparison of their advantages and disadvantages)
Question 6: Do you provide help purchasing an annuity with IRA or 401k funds?
heather: certainly! Since 2017, asTheLifeTank.comOne of the founders, I (Editor’s note:Heather Xiong CFP®️) has helped many 401(k) and IRA holders move their funds into an annuity account without paying taxes and achieve monthly cash flow guaranteed for life.
With the right help, the process is relatively simple.The above is the explanation and advice I provided on how to use IRA and 401k to purchase retirement annuities to transfer funds.If you are starting to consider using funds in IRA and 401k to plan to ensure lifelong monthly retirement income cash flow, welcome to talk to meMake an appointment to contact. (End of full text)
(>>>Recommended reading:2024 Annuity Guide: 6 Misunderstandings about American Annuity Financial Management and Their Truths )
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*Important Disclaimer: This information is not intended to provide legal or tax advice.Before parallel transferring qualified account funds to an annuity account, it is recommended that you consult with an appropriate legal or tax professional.
