Income Annuities in Your IRA? The Advantages Just Might Surprise You.


The main advantage of income annuities in your IRA is to create guaranteed lifetime income, without risk.

Billions of IRA dollars are allocated each year for these annuities. The key is to own the right income annuity in your IRA.

The main advantage of an IRA is using pre-tax dollars to create future income later in life. Annual distributions are pre-determined by IRS guidelines, known as Required Minimum Distributions. Because IRA rules do not require that distributions be guaranteed or paid for life, that responsibility falls on retirees. Even though most people expect guaranteed lifetime income from their IRA, they are invested in risky equities. There are several advantages of owning income annuities in your IRA.

More is better when it comes to principal guarantees and lifetime income payments. Read about the advantages of income annuities in your IRA.

A Simple Comparison.

Assume two people the same age have identical IRAs worth $500,000. At 72, they must begin taking minimum distributions (RMDs). Everything is the same except for how the $500,000 is invested. Traditional IRA #1 is made up of diversified equities. IRA #2 owns an indexed, income annuity that will pay income FOR LIFE. It can NEVER LOSE PRINCIPAL and EVERYTHING is contractually guaranteed.

Which One is Best for You?

The IRA with the income annuity is typically better because it provides guaranteed payments for life, without assuming any risk. Some critics say the tax deferred status of an annuity is wasted inside an IRA. This is not so. It is a red-herring, solely designed to confuse people. The IRA’s primary objective is to create maximum retirement income, not shelter assets from tax.

Therefore, the extra risk of owning equities in your IRA may not be worth it. The primary goals in retirement are to preserve principal and maximize income for life. Few things create guaranteed lifetime income like an annuity. I am happy to explain the benefits of income annuities in your IRA. After a brief conversation, you will have a good understanding about the advantages of putting IRA assets in income annuities.

Ancient history…

There has been a long-standing rule of thumb about combining annuities and IRAs. The thinking was similar to the outdated municipal bond rule in IRAs. Some advisors are still against muni bonds in IRAs because the tax deferral is wasted in an already tax-deferred account.

But this belief is outdated due to the significant improvements in income annuities. Proper indexed annuities are widely accepted for their:

  • income riders
  • guaranteed living benefit riders
  • enhanced death benefit riders
  • innovative investment features
  • superior fixed income yields

Economists and professors from Harvard, Wharton, Duke and Stanford all agree about the undisputed advantages and benefits of indexed annuities.

Says Michael Kitces, investment planning expert: “Given these changes, it is perhaps time to abolish the ‘annuities should never go into an IRA’ rule and recognize that it has become more a myth and remnant of old than proper advice in today’s environment.”

Please contact me at 561-869-4500. Complete the contact form on this page or anywhere on the site to schedule a complementary discussion. For a list of Tribune articles I have written, click this link.

income annuities in your ira.


Ted Bernstein

Dedicated to helping people create the ultimate retirement security and protection plan to safeguard their families and businesses. I stress guaranteed income solutions, indexed annuities and state of the art wealth preservation strategies. As the innovator of life insurance products without commissions, my recommendations are impartial, objective and always in the best interests of my clients.

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