IRA Annuity - Convert, Roll Over & Other Tricks

Hi there, Stan The Annuity Man, America's annuity agent. Yes, you're right. I am licensed in all 50 states. I'm glad you asked that question.

It's funny. I have people that will call me and go, "Hey, is this Stan The Annuity Man, America's annuity agent licensed in all 50 states?" I'm like, "Yeah, exactly." It just kind of rolls off the tongue, right? What are we talking about today? IRA annuity. What's an IRA annuity? It sounds like something my mom would ask. Let me do her voice. "Hey Stan, do you have IRA annuities that I-" "No, Mom, not for you. I don't do business with family because you call me every day. Just go to the bad chicken dinner seminars, eat the other agent's food, and tell me what they have for dessert."

The great part about her is that she'll actually get the invitation in the mail and the postcard. She'll call them up and say, "I see that you're serving steak, and I really do like a good filet mignon, but what's for dessert?"

She'll decide whether to go to the bad chicken dinner seminar based on the dessert. But then again, she's from the South. We start with dessert, so it totally makes sense.

But of course, I said, "Mom, it's not filet mignon, it's filet mignon," which she's still struggling with from the standpoint of pronouncing it.

Enough about that. IRA annuity. That's what we're talking about today.

‌The Structure

‌IRA annuity. What is that all about? First of all, let's talk about IRAs and annuities. IRA is a structure. Think of it as a house. The annuity, or whatever you purchase, mutual funds, whatever, is the furniture that goes inside the house. There's no such thing as an IRA annuity. That comes from my parents, who would buy only CDs. "Oh, we have IRA CDs." "No, you have an IRA with a CD inside it." I kept saying that. I was hoping one day to convince them that what I was telling them was the truth, which it is. But they're like, "No, no, it's an IRA CD." I'm like, "Okay, whatever." But when you talk about annuities inside an IRA, one of the funniest things is when people say, "Never ever put an annuity of any type inside of an IRA," which would be like putting a financial journalist or the master of the universe, a financial advisor, in there.

‌Dumb as a box of hair is what I would call that. That's a Southern saying. You can take that if you want to. Of course, you can put annuities inside an IRA. In fact, a Qualified Longevity Annuity Contract was designed by the IRS and the Department of the Treasury. Yes, both are friends, and it was created for use in a traditional IRA.

‌When people say, "No, it's not an IRA," they're dumb as a box of hair.

They need to read more, and they need to watch Stan The Annuity Man videos and listen to my podcast, Fun With Annuities every other Tuesday on all major platforms. Platforms? Yes, platforms.

‌So, IRA annuity. What do you do if you have an annuity inside of an IRA or, better yet, "Stan, should I buy an annuity with IRA money?" There's no good answer to that, just bad sales pitches, as I always say. But if you're buying it for the contractual guarantee, do it. You can own an Immediate Annuity inside of an IRA. You can own pretty much every single type of annuity inside of an IRA. The question is, do you want to use that money, or do you have non-qualified money?

‌The Overall Picture

‌One of the things that my team of experts and I bring to the table is our ability to say, "Okay, tell us the overall picture." Maybe it'll make more sense to use non-IRA or traditional IRA money. There's good and bad. There are no perfect answers to that. But can you use IRA money to fund an annuity? Absolutely. For lifetime income or principal protection or whatever you want to solve for.

‌Non-Taxable Event

‌Now, when you transfer an annuity from one IRA to another, that's a non-taxable event. So, let's say you had a Variable Annuity at Fidelity, a great firm, and you said, "You know what? I don't want that volatility anymore. I want to transfer that to a Fixed-Rate Annuity, a Multi-Year Guarantee Annuity. I want to transfer the Variable Annuity from Fidelity to, let's say, a fixed-rate MYGA at XYZ annuity company." That's a non-taxable event. It doesn't trigger any taxes. An IRA will be established for you at the Multi-Year Guarantee Annuity carrier. And so, it goes from one to the other. You can transfer it like that if you want to, and it is a non-taxable event.

‌People always ask me, "Okay, great, Stan The Annuity Man, I transferred from Fidelity," great company, "to XYZ annuity company, and now the duration is over." Let's just say you bought a three-year Multi-Year Guarantee Annuity with a three-year annual percentage guarantee, and the three years are up, and you say, "Hey, Stan The Annuity Man, that was a fun ride, a fun contractual ride. But I want it to go back to the IRA that it came from." It can do that. Non-taxable event. Just remember, the company that's receiving the money is going to pull that from the company that's coming, too. If you want to transfer it back, Fidelity would pull it back via paperwork, a non-taxable event, and bring the money back. Just put it in the back of your head that you can do that.

‌The PILL

‌So, IRAs, IRA money, do annuities fit? They absolutely fit. The question is, do you need an annuity? And then that's a bigger discussion. What do you want the money to contractually do? When do you want those contractual guarantees to start? You can use the acronym that I've come up with, trademarked, and tattooed across my shoulders, not.

‌PILL. P stands for principal protection. I stands for income for life. L stands for legacy, and the other L stands for long-term care/confinement care. If you do not need to contractually solve for principal protection, income for life, legacy or long-term care/confinement care, one of those four, or a combination, then you do not need an annuity. Do not ever buy an annuity for market growth. Please, just please, don't. That's my opinion. And I have been on that side of the table because I used to be with Dean Witter, Morgan Stanley, Paine Webber, and UBS.

‌The fact that I said Dean Witter and Paine Webber, you know how old I am. Been there, done that. I got cowboy boots older than most advisors. Most advisors have never even seen a down market. They just think that markets just continually go up.

‌Listen. Everyone out there, and you know what I'm talking about, the people out there who are seasoned like I am, it's not going to always be like that. You have got to be very, very careful. But IRA assets and IRA annuity, does it make sense? Yeah, it just depends on what you're trying to solve for.

‌Roth IRA Money

‌One more thing: When we're talking about IRA annuities, which is kind of the title of the blog, we need to talk about Roth IRA money. In my opinion, Stan The Annuity Man, America's annuity agent, I've been doing this for decades and decades and decades and decades and decades. I know you're saying, "Stan, but you look so young." Good point. But I'm really not. In my opinion, in a perfect world where actual unicorns chase the butterflies, and when they catch them, they pet them. It's a good world. Roth IRA money should not be used for annuities unless you have to. If you did, would the money coming out be tax-free? Yes, of course it would be. And I'm not saying you shouldn't, but that should be the last place you go.

‌In my opinion, Stan The Annuity Man, I've been doing this a long time; Roth IRA should be where the growth components of your portfolio and non-annuity components of your portfolio should be. But can you use it? Yeah.

‌Client Example

‌I had a guy call me the other day, and he goes, "Stan, I've seen your videos where you start yodeling like you did about Roth IRAs, but 80% of my money is in Roth IRAs, Stan. I got to use the Roth IRA." That's fine. Under those circumstances, we did use it. He bought an Immediate Annuity with Roth IRA money, and that income stream was tax-free. But in a perfect world, once again, where unicorns chase the butterflies, catch the butterflies, then pet them and let them go, Roth IRA should be for non-annuity assets and true growth.

‌All right, so I've pretty much covered every single thing about IRA annuities, right? Nod your head. Now, the one thing that happened as I was taking a sip of Coca-Cola, my CEO goes, "I don't think unicorns can actually pet butterflies because they don't have the dexterity, because they have hooves." And I said to her, "I love you because you're detailed, but that's crazy talk." I was making an example, but I appreciate her saying that. And you probably went, "Unicorns chasing the butterflies, petting the butterfly..." I understand. Listen. I love life. I'm a little out there. I'm a little eccentric, as they call it, but I know what I'm talking about when it comes to annuities and that's the reason I am Stan The Annuity Man, America's annuity agent. Yes, I'm glad you asked again; licensed in all 50 states.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.