Roth IRA annuity income rider
Have a client that wants to fund a Fixed Index Annuity with Roth IRA funds. We would normally do this for tax free income in the future based on the contract and the Income rider that provides the contractual income. We would normally assume this is distributed from the annuity and therefore the Roth IRA to them (bank account) to spend.
The question is, can the client turn on the income rider in the future and take the contractual income (what I think is actually treated as a distribution) into a Roth IRA. Income amounts annually will be north of $100k once turned on.
Just to clarify, turning on the income rider, can she take that amount and treat it is as a “rollover” or Direct transfer into a different Roth IRA.
Thanks!
Permalink Submitted by Alan - IRA critic on Wed, 2022-09-14 21:41
The distribution could be rolled over but due to the one rollover limit in a 12 month period, this would have to be done by a direct trustee transfer, and the insurance company may not cooperate in setting up an automatic series of such transfers. Client would have to check with his insurance company Roth custodian and with the receiving custodian to see if direct transfers can be established.