• Retirement Planning

• As you approach retirement, ensuring your savings work for you—not against you—is crucial. Many people have accumulated funds in 401(k)s, 403(b)s, stocks, certificates of deposit (CDs), and traditional savings accounts. While these are excellent tools for building wealth, transitioning to a strategy that guarantees predictable income is essential for long-term security. One effective way to achieve this is by rolling over those assets into fixed annuities.

  What is a Fixed Annuity?

  A fixed annuity is a financial product offered by insurance companies that provides:

  • Guaranteed interest rate for a specified period.
  • Tax-deferred growth on earnings.
  • Predictable income stream during retirement, either for a set term or for life.

   

  Why Consider Rolling Over to a Fixed Annuity?

  1. Stability and Security

  Unlike market-based investments (such as stocks), fixed annuities are not tied to market fluctuations. This means your principal and interest are protected regardless of market volatility—a critical factor when you can’t afford large losses during retirement.

  2. Guaranteed Lifetime Income

  You can convert your annuity into a guaranteed income stream that lasts for life, reducing the risk of outliving your money. This is especially important as life expectancy increases.

  3. Tax-Deferred Growth

  Earnings inside a fixed annuity grow tax-deferred, meaning you don’t pay taxes until you withdraw the money. This allows your savings to compound faster compared to taxable savings accounts or CDs.

  4. Better Rates Than CDs and Savings

  Traditional savings accounts and CDs often have low interest rates. Fixed annuities typically offer higher guaranteed rates, providing more growth without additional risk.

  5. No Required Minimum Distributions (RMDs) Before 73

  When you roll over qualified funds (like from a 401(k) or 403(b)) into a qualified annuity, RMD rules still apply at age 73, but the accumulation period before that remains tax-deferred, maximizing growth.

  6. Protection Against Sequence-of-Returns Risk

  When drawing income from volatile investments (e.g., stocks), market downturns can significantly reduce your portfolio early in retirement. Fixed annuities eliminate this risk by offering guaranteed returns.

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  How Each Asset Type Benefits from a Rollover

  • 401(k) & 403(b): Rolling into an IRA annuity keeps the tax-deferred status while adding guarantees and lifetime income options.
  • Stocks: By moving market-exposed assets into a fixed annuity, you lock in gains and protect your portfolio from downturns.
  • CDs: Fixed annuities often provide better rates and longer guarantees, with the added benefit of tax deferral.
  • Savings Accounts: Moving idle cash into an annuity helps fight inflation and low-interest erosion, putting your money to work safely.

   

  Key Takeaways

  • Peace of Mind: No market risk.
  • Tax Advantages: Tax-deferred growth.
  • Lifetime Income: Predictable and guaranteed.
  • Better Growth: Higher rates than CDs and savings accounts.
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Before You Decide:

If you are considering purchasing an annuity call us to discuss the following:

• The rating of the insurance company (indicating their financial strength) issuing the annuity, particularly in the case of a fixed annuity.
• Understand the fees you will pay.

For additional information about annuities you can visit www.sec.gov/answers/annuity.htm  (If you cannot access this information online, contact us to request a copy.)

* Annuity guarantees rely on the financial stability and claims paying ability of the issuing insurance company.