Rolling a 401(k) or IRA into an annuity

Short answer: you can move money from a former employer's 401(k) or an IRA into an IRA annuity with a direct rollover. Done provider to provider, it is not taxed and has no penalty. A check made out to you triggers 20% withholding and a 60-day deadline.

When you can roll over

• After leaving an employer
• At age 59½ while still working, if your plan allows in-service rollovers
• From one IRA to another at any time
• From an inherited account, under special rules

Direct vs. indirect rollover

Agent tip: Always ask for a direct rollover. We fill out the paperwork with you.

Step by step

1. Choose the annuity and open an IRA annuity application.
2. We request the transfer from your 401(k) or IRA provider.
3. The provider sends funds directly to the insurance company.
4. The annuity is issued and you receive the contract.
5. You review it during the free-look period.

Things to check first

• Fees and investment options in your current plan
• Company stock in the 401(k), which may have special tax treatment
• Outstanding 401(k) loans, which may become due
• Surrender charges on the new annuity
• Required minimum distributions, which still apply inside an IRA annuity

Is it a good idea?

A rollover into an annuity can make sense if you want to protect savings from market losses or turn part of them into guaranteed income. Keeping some money in growth investments and liquid savings is usually wise. We look at the whole picture before recommending how much, if any, to move.