02 Dec I’m 94. Can I still buy an annuity within my IRA?

Q. I’m 94 and have an IRA account. Can I still buy an annuity with IRA funds?
— Going strong

A. Maybe, but the biggest question is whether you should.

On the upside, annuities can be a valuable source of income in retirement.

“They can provide guaranteed income that you cannot outlive,” said Jody D’Agostini, a certified financial planner with Equitable Advisors/The Falcon Financial Group in Morristown.

She said a so-called immediate annuity can be purchased with a single premium or lump sum. This will create a stream of income that you can continue for some set period or for your lifetime, depending upon how it is set up.

“It depends on the insurance company as to their age limits, but some do allow the purchase up to age 100. Many insurance companies stop selling these at age 95,” she said. “The payout is dependent upon your age and life expectancy. IRA annuities are taxed as ordinary income.”

Then there are downsides.

Some annuities have high commissions. Also, IRAs offer tax-free growth, so some advisors say putting an annuity inside of an IRA is unnecessary because the IRA already has tax advantages.

Also, you should make sure that you have sufficient liquidity in your other accounts because the money in the annuity will be tied up and you will not be able to access more than your monthly allowance, D’Agostini said.

Most of the other types of annuities, such as index and variable annuities, have age limitations that do not extend into the 90s, she said.

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This story was originally published on Dec. 2, 2021.

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