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How do variable annuities compare to IRAs?

April 26, 2017annuities compare IRAs

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How do variable annuities compare to IRAs?

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Annuities and IRAs both provide tax-deferred growth, but there are differences. Anyone can invest in an annuity, in an unlimited amount. With an IRA, only those with earned income can invest, and contributions are limited. Also, an annuity can guarantee you an income for life; most IRAs cannot. In addition, the IRS says you must begin taking distributions from your IRA at age 70 1/2; most annuities do not require you to begin taking regular payments before age 85. For information on the tax deductibility aspects of IRAs or variable annuities, consult your tax advisor.