Should I Buy an Annuity from My 401(k)?

Shawn Plummer

CEO, The Annuity Expert

Annuities are a popular retirement investment vehicle. People often ask themselves whether they should buy an annuity from their 401(k) plan, and the answer is not always clear-cut. There are many variables to consider when deciding whether or not to buy an annuity with your 401(k). This 401(k) rollover annuity guide will help you understand what annuities are, how they work, and ultimately decide if it’s worth buying one for your retirement needs.

How Annuities Benefit A 401(k)

Annuities are flexible investment solutions that may help you achieve your long-term financial goals and provide a source of retirement income. Of course, tax deferral alone isn’t enough to make an annuity appealing in a tax-qualified plan. However, any 401(k) can benefit from an annuity’s flexibility.

Don’t Pay Taxes Until You Withdrawn Income.

There are no taxes to pay as long as you follow IRS regulations. In addition, you won’t have to pay any taxes on the annuity’s profits until you take them out.

Annuities Earn Interest Based On Stock Market Performance

You may earn more interest if the external market index increases in either a bull or bear market.

Lock-In All Gains and Protect From A Stock Market Crash

You will not lose money if you own a fixed or fixed index annuity if the market falls. You earn zero interest if the markets have a terrible year. In contrast to an individual stock via a mutual fund, you are restricted on the upside you can achieve each year.

Unlike a fixed annuity, a variable annuity provides unlimited upside potential without protection against market volatility. However, a Guaranteed Lifetime Withdrawal Benefit can safeguard the annuitant from running out of money due to a stock market collapse by adding one.

Guaranteed Paycheck, Even After You’ve Run Out Of Money

You can annuitize your annuity to receive monthly payments over time or for the rest of your life, as well as an optional income rider, which will generate a continuous flow of money. The insurance firm may even give you a pay increase to help cover inflation and living costs.

Flexibility In Case Of Emergency

Waivers of surrender fees are frequently offered to make it easier for you to access your retirement plan in the case of an emergency, such as going into a nursing home or dying.

Your Beneficiaries Will Inherit The Annuity

With most fixed indexed annuities, your beneficiaries will receive the greater of your annuity’s Accumulation Value or Minimum Guaranteed Value.

Annuities Offer A Better Contribution Match

Like a 401(k) match from your employer, some annuities may provide a premium bonus (up to 20%) on rollovers and additional deposits.

What’s The Next Step?

So, should you buy an annuity with your 401(k)? Unfortunately, the answer is not always clear-cut. It depends on various factors, including your age, health, and retirement goals. That being said, annuities can be a valuable part of a retirement plan. Use our 401(k) to annuity calculator to get an estimate of the income you could receive!

Contact us today if you’re interested in learning more about rolling over a 401(k) to an annuity or need help deciding if they suit you. We would happily provide you with a free quote and discuss your specific needs and concerns. Thanks for reading!

Should I Buy An Annuity From My 401(K)? Is Rolling Over My 401(K) To Annuities A Smart Move?

Request A Quote

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

Contact Us

Related Reading

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

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

Scroll to Top