What are Variable Annuities IRAs?

Variable annuities, on their own, are sold by insurance companies and offer prospective customers a range of possible investment options.  When you buy a variable annuity for your IRA, you are essentially buying the guarantee of future regular payments.  These payments may occur in the immediate future if your retirement is imminent or they may be deferred until you retire at a later date.  Variable annuities can be purchased separately and then rolled into a variable annuity IRA, or they can be purchased as an investment option within an existing IRA, depending on your account provider.

You can pay for your variable IRA annuity outright or make a series of payments over time, depending on your particular individual situation and circumstances.  As the account is funded, you’re able to choose how your money will be invested from a range of options that typically include stocks, bonds and mutual funds.  The amount of money you make will depend on how strongly your investment choices actually perform over time.

Another benefit to variable annuities is their tax-deferred status, which can result in serious tax savings – especially when rolled into a tax advantaged variable annuity IRA.  This comes in addition to the benefit of a minimum guaranteed regular pension payment for the future, so you can be sure that you will retire with a carefully defined set basic income amount.  Anything you make in addition to this is a wonderful bonus.

Setting up an Annuity IRA

When you set up your variable annuity rollover IRA, you will be given the choice of how to pay for the insurance annuity – either upfront or in increments. You will then be offered a range of investment approaches to choose from.  Research your options very carefully before selecting the approach that you will take when setting up your IRA annuity.

When you set up your IRA annuity, you will also most likely be offered death benefit options.  Although no one wants to reflect on their possible demise, this provides a great opportunity to ensure that your spouse and children are provided for if something serious happens to you.  Because of advantages in the structure of variable annuity IRA accounts, your beneficiary will receive the guaranteed amount, regardless of how much you have contributed towards the IRA annuity’s agreed cost of policy.

Finally, it’s important to understand that variable annuities are set up to be tax deferred investment vehicles.  While your IRA annuity grows, you won’t pay tax on any profits that you make while preparing for your retirement.  However, with an IRA annuity, you will incur tax later on when you take money out.  For this reason, people who set up IRA annuities earlier on in life receive the maximum benefits from this investment option – so take the time now to carefully consider whether or not this option is right for you.