Tax Considerations

• IRAs can grow either tax-deferred or tax-free depending on whether they are a traditional IRA or Roth, respectively. Annuities can support either of these IRA structures or allow non-IRA assets to grow tax-deferred.
  
  

Fees

• IRAs have custodial fees as well as fees for the management of each mutual fund an IRA may hold. Rolling IRA assets into variable annuities adds fees such as the "cost of insurance" which is required in the event you decide to annuitize (take income for the rest of your life).
  
  

Time Frame

• IRAs must be held until age 59 1/2 to avoid a 10 percent tax penalty for early withdrawal. If you roll your IRA into an annuity, you are committing to a three- to seven-year contract extending the time you can either change the investment or distribute all assets.
  
  

Warnings

• The SEC warns there is no tax-advantage for rolling IRA assets over into a qualified annuity. Review the fees associated with any new account; fixed annuities are not FDIC insured.
  
  

Benefits

• Some annuities offer a blend of fixed and variable returns. Rolling an IRA into an annuity can provide a guaranteed rate of return higher than other fixed or guaranteed options.