Annuity IRA penalty pre 591/2 avoidance
If a client takes out a fixed index annuity in an IRA with a lifetime withdrawal rider pre 59 1/2, does that avoid the 10% penalty or does he have to wait until 59 1/2 to avoid it?
If a client takes out a fixed index annuity in an IRA with a lifetime withdrawal rider pre 59 1/2, does that avoid the 10% penalty or does he have to wait until 59 1/2 to avoid it?
Permalink Submitted by Alan - IRA critic on Fri, 2025-05-16 09:44
The IRA annuity owner must have reached 59.5 or qualify for another penalty exception to avoid the penalty. However, a 72t plan can work with an IRA annuity to avoid the penalty before 59.5 if the client is willing to tolerate the lack of flexibility and attention to detail that comes with a 72t plan.