Annuities in IRAs?
Occasionally the question comes up about whether it makes sense to buy a variable annuity inside a tax-deferred plan like an IRA. Please refer to the list of four features provided by annuities that appears at the top of this article. The first, income deferral, is utterly irrelevant if the annuity is held in an IRA or retirement account. The IRA and plan already provides for the deferral and, in fact, distributions are governed by the provisions of Section 72 applicable to IRA retirement plans, not the general annuity provisions. I would go so far as to tell anyone who has someone trying to sell them one of these products in a plan based on the tax benefits to run as fast as possible away from that adviser. S/he is either very misinformed or very dishonest. The second, beneficiary designation, is also a nonissue for annuities in a retirement account. IRAs and qualified plans already provide for beneficiary designations outside of probate, for better or worse. The third, annuitization,
