Annuity Rules

[aus0417]

Where can I find good (easy to understand and most importantly accurate!) information on how and when money can be taken from vehicles like 401(k)s or IRAs and placed into an annuity?

The first paragraph is the most important; however, if I could also get sales tips & techniques for the aforementioned situations in the same place, that would be "icing on the cake!"

 

[arnguy]

Go to Internal Revenue Service.

 

[ScottLFB]

Use the InterGoogle unless you have something specific you are trying to ask here.. Are you just looking for what ifs when it comes to qualified money?

 

[Hopwood04]

An annuity is simply a vehicle to which money can be invested in. For instance an IRA can be invested in an Annuity or a C.D. or a Mutual fund. If you are wanting to know when you can touch an IRA without incurring a penalty, it is at age 59 1/2.

If you want documentation, most companies offer brochures that explain this info.

 

[DHK]

Do a google search for "IRS Special Tax Notice 401k" and pick a document to read regarding 401(k) rollovers &/or direct transfers to other accounts/annuities.

Tip: When you get on the phone with the current custodian of the funds and they ask if the client has received the IRS Special Tax Notice, you can print one out for the client yourself and your client can say "yes".

There is typically 4 options available to each participant:
1) Roll it into a company annuity and receive income for life
2) Roll it into another 401k or other employer sponsored plan
3) Roll it into a personally owned IRA
4) Cash it out (and have 20% manadatory income withholding and possibly 10% penalties).

NOTE: If the 401k plan participant separated from service at the age of 55 or over, they can access their 401k funds directly without incurring a 10% penalty! If they roll over their plan to a traditional IRA, then the rules change back to requiring being over age 59 1/2.

2nd NOTE: Learn about Net Unrealized Appreciation about individual stock positions in 401k plans or other employer sponsored retirement plans.

If you don't know about these things, you may be opening yourself to a serious, and legitimate complaint.