Should You Put an Annuity in an IRA?

Let me start by answering that question...if an annuity fits your investment objectives than there is no reason that an annuity should not go in your IRA. Okay all you smarty pants out there who keep arguing that it is tax deferred and it does not belong in your IRA...SO WHAT??? The fact that it is tax deferred is only one reason why people buy annuities.

Now, let me elaborate on my thoughts here. If you are buying an annuity strictly for tax purposes, then it is obvious that an annuity should not go into your IRA. However, there are many great benefits that an annuity can provide for an IRA. For example, fixed annuities are provide a safe way to get a return higher than a CD. So if you would put a CD in an IRA, why not a fixed annuity? So you'll already have the advantage of tax deferral but now you get the luxury of higher rates and a safe return. Furthermore, it is one additional way to diversify a portfolio. With a variable annuity (although I am not a fan of) you get a guaranteed death benefit. So no matter whether your annuity goes up or down, the death benefit can never go lower than the original amount invested (less any withdrawals). So there is an advantage that no stock or mutual fund can provide for you. So why wouldn't you use it?

The bottom line is that annuities are another type of investment vehicle. Although many professionals argue that they should not be used in an IRA, I believe that they have not fully thought about the benefits of an annuity. There are many benefits an annuity can offer and if these benefits match your needs, than I can truly say, it may be appropriate.

However, before you invest in an annuity, or anything for that matter, it makes sense to know what's right for your particular situation. Furthermore, it is good to know how annuities really work and which one is right for you. So for those of you who say an annuity is not right for an IRA, I'm sorry but you are wrong. The answer is it depends. It depends on the client's situation and what the client is looking for. If it can be found in annuities, then go for it...

Ignorance is not bliss...

Tony Bahu
CEO AnnuityMD.com
http://www.AnnuityMD.com