A Roth IRA Annuity: What Is It and How Does It Work?

Shawn Plummer

CEO, The Annuity Expert

What Is A Roth IRA Annuity?

A Roth IRA annuity is an investment account funded with Roth IRA contributions. This means that the money in the account has already been taxed, so there are no taxes owed on withdrawals made in retirement. The money in a Roth IRA annuity can grow tax-free, and withdrawals are typically tax-free.

Helpful Tool: Roth IRA annuity calculator

Annuity In Roth Ira

How Does A Roth IRA Annuity Work?

A Roth IRA annuity works like any other type of annuity. The account holder makes regular contributions to the account, and the money grows over time. When the account holder reaches retirement age, they can start withdrawing from the account. The money can be used for any purpose, including living expenses, healthcare costs, or investing in a new business.

Annuity Roth Ira

What Are The Benefits Of A Roth IRA Annuity?

There are several benefits associated with a Roth IRA annuity.

  1. First, the money in the account has already been taxed, so no taxes are owed on withdrawals made in retirement.
  2. Second, the money in the account can grow tax-free.
  3. Third, the account’s withdrawals (including lifetime income options) are typically tax-free.
  4. Finally, the account holder can use the money for any purpose in retirement.

Note: Once a Roth annuity is depleted, any supplemental payments from the insurance company may be subject to tax, as they no longer originate from tax-exempt contributions or profits, contingent on the distribution method. 

Roth Annuity

What Are The Drawbacks Of A Roth IRA Annuity?

There are some drawbacks associated with a Roth IRA annuity as well.

First, the account holder is required to make regular contributions to the account. This can be difficult to do if the account holder is not disciplined.

Second, the account holder may not be able to access all the money in the account if they need it before retirement.

Third, contribution amounts are limited.

Finally, the account holder may owe taxes on withdrawals if they do not follow the rules associated with a Roth IRA annuity.

The Next Steps

Overall, a Roth IRA annuity can be a great way to save for retirement. It offers several benefits, including tax-free growth and withdrawals. However, there are some drawbacks to consider as well. For example, the account holder must be disciplined in their contributions, and they may not be able to access all of the money in the account if they need it before retirement. 

Contact us today to see how we can help you set up a Roth IRA annuity that meets your specific needs. We offer competitive rates, and our team of experts is here to help you every step of the way.

Roth Ira Annuity

Roth IRA Annuity Quotes

Get help from a licensed financial professional. This service is free of charge.

Contact Us
First
Last

Frequently Asked Questions

Do Roth IRA Annuities follow the same rules as a standard Roth IRA?

Yes, a Roth IRA annuity follows the same rules as a standard Roth IRA. The account holder must be 59 ½ or older to withdraw without penalty.

What is the contribution limit for a Roth IRA Annuity?

The contribution limit for a Roth IRA Annuity is the same as that for a standard Roth IRA. For 2024, the contribution limit is $7,000 for those under age 50 and $8,000 for those 50 and older.

Can I convert my traditional IRA into a Roth IRA Annuity?

Yes, you can convert your traditional IRA into a Roth IRA Annuity. However, you will owe taxes on the amount that you convert.

Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

Scroll to Top