Can I Move My Fixed Annuity Into an IRA?
Question: Can I move my fixed annuity into an IRA?
Yes and no…
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You can do a “1035" exchange between annuities, fixed to variable (although technically questionable, it has never been challenged by the IRS), variable to fixed, and fixed to fixed.
The 1035 exchange refers to the IRS code that allows an annuity holder to move the profits from one annuity to another without being subject to taxes or the 10% early withdrawal penalty at that time. The profits will generally always be taxable (at ordinary income rates, not capital gains) in the future when withdrawn and spent.
Whenever you exit (or 1035) an annuity, you have to be aware of surrender charges. Annuities can have some of the highest, and longest lasting surrender charges in the financial industry. Thus even if you avoid paying taxes in the switch from one annuity to another, you still may pay a surrender charge ranging from 1% to 10%+.
Now, to the heart of your question, can you move an annuity into an IRA?
If the annuity you own is already titled as an IRA (annuities can be owned in IRA’s or outside them), then you can exit the contract within the IRA (minus surrender charges), and buy something else under the IRA “umbrella”.
If the annuity you own is not an IRA, then the only way to get the funds into the IRA (which is probably not advisable), is to take a distribution, and use the money leftover after taxes and penalties to fund an IRA.
Just bought my first SMA and was very happy to have gone through Immediate Annuities.com. I found them in an article in the Wall Street Journal. As a first time buyer, I had a lot of questions. But to their credit, they did a great job answering my questions directly or getting the right answers from the right people when they needed to.
In that case, I generally feel like you would be better to find a low-cost annuity, with good investment options, and move on with life.
I’d also seek out professional tax help if you do anything with your IRA, a mistake could cost you a lot of money!
Source: kenclarkcfp.com - 09/17/2007
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Comments (4)
Kyle
2026-01-20 14:36:50
Hi James,
Thank you for reaching out.
As long as your annuity was issued as a Traditional IRA, you should be able to transfer it out to any other Traditional IRA at the end of your term. This could be a transfer into another annuity, or simply a transfer out to an IRA with Fidelity, Vanguard, Schwab, etc.
Just make sure you ask your insurance company what paperwork they will require in order to make the transfer happen,
Best regards,
Kyle
James C.
2026-01-18 18:27:57
I have annuity that is about to mature can I just put it back in my IRA?
Kyle
2024-07-05 10:27:06
Hi BJ,
Yes. If your IRA annuity is out of surrender, you should be able to transfer the balance out to a Traditional IRA. This would generally require your Traditional IRA company to send a transfer form to your insurance company, requesting the funds via IRA-to-IRA transfer.
Best regards,
Kyle
Bj
2024-07-03 19:37:10
Can I rollover and Annuity IRA to a Traditional IRA when there is no surrender fee?