5 Questions to Ask when Rolling Over to an IRA Annuity

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Roth IRA and Roth 401(k):

These two function similarly to each other by growing tax free. If you follow the rules, when you begin withdraws the money taken out will also be income tax free. If you had a Roth IRA and Roth 401k, at retirement, your Roth 401k could be rolled over, or combined, with your Roth IRA into a Roth IRA annuity.

Traditional IRA and Roth IRA:

The exception to combining accounts of like-kind is called a Roth conversion. This would be a transfer of a traditional IRA account money into a Roth IRA. In this case, the amount converted is all considered taxable income in the year the combination happened.

After-Tax Money:

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After-tax money cannot be added to your IRA annuity account.

4. Will There Be Taxes Owed When I Combine Retirement Accounts?

As long as you combine the accounts in the right way, there should be no change to taxes owed.

Once you’ve moved your retirement account funds, the custodian will send you a tax form called a 1099-R at the end of that year. This form will report the transaction as a transfer, rollover, or distribution. Sometimes a custodian incorrectly reports a transfer or rollover as a distribution, so be sure to check your tax form.

5. Can Spouses Combine Retirement Accounts?

No. A pre-tax retirement account must be titled in one person’s name only. You can name your spouse as beneficiary, but you cannot name your spouse as a joint owner nor combine your IRA with your spouse’s. At your death, your IRA can be rolled over or combined with the surviving spouse’s IRA, but not while you are both living.

For many people, an IRA Annuity Rollover is a great way to obtain the security of an annuity. If done correctly, there should be no tax penalty for doing this.

If you are considering the rollover, let us know if you have any questions. With enough information, you should be able to make the move with peace of mind.


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