Commuted IRA Annuity
A client has a variable annuity that allows the excess living benefit to be annuitized. After one year the client is allowed to commute the remaining payments into a lump-sum.
I know the annuitized payments can’t be rolled over but can the commuted lump-sum? I doubt it but I wonder if it is even addressed in the IRS code.
Mark
Permalink Submitted by Al Fry on Tue, 2008-04-01 00:36
I would think that would be allowed. What if the annuity was transferred into a self-directed IRA? Then the commuted amount would be paid to the custodian, which means it would remain in the IRA. My custodian only charges $35.00 per year fees. Al
Permalink Submitted by Mark Hilgenberg on Tue, 2008-04-01 16:47
Hi Al,
I have been trying to get the company to give me information on that. The problem is they no longer sell annuities so it is just a few person service team. The problem with moving an existing annuity to a self directed annuity is it requires a change of owner (The custodian becomes the owner) and usually ownership changes lose the remaining living benefit.
Mark