Unauthorized withdrawals from IRA funds before the age of 59½ are typically subject to taxes and penalties, but it'...Read more
How to Use an Annuity in Your IRA
- April 11th, 2016
A new (2014) rule is allowing investors to use annuities in retirement to help save on taxes. The IRS now gives Individual Retirement Account (IRA) owners the ability to invest in annuities inside their retirement accounts without worrying about minimum distributions.
One of the downsides of an IRA is that you are required to take minimum distributions from the IRA beginning at age 70 ½, whether you need the money or not. This means you will have to pay taxes on the distribution and your investment will not continue to grow at the same rate because there is less money in the IRA.
Local Elder Law Attorneys in Ashburn, VA
Hale Ball Carlson Baumgartner Murphy PLC
Attorney Samantha Simmons Fredieu is an associate at Hale Ball. Ms. Fredieu graduated magna cum laude from Vermont Law School where she was the symposium editor on the Vermont Law Review, a production editor on the Vermont Journal of Environmental Law, and a member of the Moot Court Advisory Board. She has clerked for...
Law Offices of John L. Laster
John Laster is a lawyer licensed to practice in Virginia, Maryland and the District of Columbia. He limits his practice to wealth transfer planning, trusts, wills, powers of attorney, health care decision-making issues, estate administration and related tax, elder law and disability concerns. Listed in The Best Lawyers...
Hammond and Associates, LLC, Elder Law, Estate Planning, Wills, Trusts, Probate
For Jeffrey Hammond, the practice of Elder Law is personal. Jeff’s many years of experience in law and in business did not prepare him for the crisis he faced in 2005 and 2006 when his father suffered a stroke and both of his parents suffered from dementia and other medical problems. At that time, Jeff began an i...
A new tax rule now allows you to invest 25 percent of your IRA or 401(k) account balance or $125,000 (whichever is less) in a deferred annuity, and you won't have to take required minimum distributions on that money. A deferred annuity -– also called longevity annuity -- allows you to invest a lump sum and receive a guaranteed lifetime payout that starts at a later date. The longer you defer payouts, the more money you will get.
The new rule creates a new tax treatment for these annuities, called a qualifiying longevity annuity contract (QLAC). It allows you to buy a deferred annuity for up to $125,000 with your IRA assets and defer the payments until you need them. The value of the annuity contract is excluded from the plan balance that is used to determine the required minimum distributions. If you die before all the money you invested is paid out, the amount of the original investment not paid out is returned to your account, so it can go to your heirs.
For more information about this new rule, click here.
For more from the IRS on it, click here.
Last Modified: 04/11/2016