Funding an Immediate Annuity with Your 401k or Pension

Annuities may offer a way for you to save for retirement and may be most appropriate if you have maximized your contributions to other retirement plans, such as 401(k)s and IRAs.

Immediate annuities can be purchased with either qualified (pretax) or non qualified i.e. after tax dollars. For purchasing immediate annuity you can transfer your funds from a traditional IRA, Roth IRA, or 401(k) or 403(b) account. Also, if you have an existing non qualified deferred annuity or life insurance policy, you may transfer those accumulated funds to purchase an immediate annuity.

Resources obtained from traditional IRAs or savings of investment vehicles can help you to bridge that gap between your income and expense. Placing those resources into an immediate annuity can help you create a stream of income, enabling you to help maintain lifestyle as preferred by you. Because an immediate annuity is designed to provide income stream with immediate effect, it offers no additional tax-deferred benefits over an IRA or other tax-qualified plans.

Immediate annuity helps a person in bridging the retirement income and requirements gap. If you want to maintain your current standard of living in retirement, your money will have to at least keep pace with inflation. An immediate annuity as an added product in your retirement portfolio, will offer growth-oriented investment options and also help you to keep pace with inflation.

If you wish to turn over your pension fund into a secure guaranteed income stream then immediate annuity is the best option for you. Because an immediate which is also called straight life annuity begins making regular monthly payments to you shortly after you deposit the funds from your pension with the insurance company.

Besides turning a lump sum of money into an instant stream of income, immediate annuities also helps you with long lasting retirement income. If you invest in immediate annuity your money will last as long as you do. An immediate annuity rate is also influenced by your age, gender, and choice of payment options.

Thus funding an immediate annuity with your 401k or Pension is highly recommended due to the perfect blend of benefits and security that It offers.