There is a lot of hype regarding IRA annuities in the market today. If you are not familiar with the subject, it would be feasible to first understand what the term “IRA” stands for. IRA is actually the short form for “individual retirement account”. It specifies a trust fund or a custodial fund account that are adopted by retired personals to safeguard their money for future use.
The individual retirement account or the IRA annuity is opened under the guidance of a custodian or a trustee. The custodian looks after the monetary fund operated by the retired person under his guidance and then invests that money into a productive plan or scheme according to your instructions. This custodian can be a bank, a savings establishment or a mutual fund etc.
Individual Retirement Account Annuity
An IRA can be called as a contract or a deal that is struck between the person and an insurance company. Under this contract, the insurance company provides a fixed amount to the mentioned person on the monthly basis as soon as the person crosses the age limit of 59 1\\\\2 or when the person retires from his job. Once this payment starts, it continues till the person passes away.
The best part about such an annuity is that you are not required to provide a trustee or a custodian from your side required to set up such a deal. In fact, many people often make IRA annuity contracts on their lives or on the joint names of theirs and their spouses.
However, there are certain strict rules that have to be followed while undertaking IRA. The part of the premium that might be allocated to life insurance will not have any deductions allowed on it.
Also, qualified annuity contracts do not provide allowance for any kind of loan provisions. The IRA laws forbid such an action. Also to be remembered before opting for IRA is that most insurance companies have high prices as the initial fees. You should be aware of the amount you are paying for purchasing the annuity and how much you are paying for the insurance company’s services.
IRA and 401K Annuity Rollovers
Ira’s that Are Self-Directed
Many people also opt for the option of self directed IRA’s. Such IRA's provides the investor a larger say in the investment of his or her money. The self directed IRA annuity allows the owners to decide what they wish to do with their money. The trustee or the custodian of the money is only required to invest the money as per the instructions of the owner. Thus, it is no surprise that insurance companies charge very high fees for such kinds of IRA’s.
Though a self directed qualified annuity offers a greater say for the owner at the time of investment, it is prudent to remember that it is advisable to opt for annuities only if you have considerable knowledge in the field of investment. Usually people with large IRA funds opt for self directed policy as it gives them greater scope to decide their own path of progress.