How to Transfer a Roth IRA to an Annuity
Jason Stolz CLTC, CRPC
How to Transfer a Roth IRA to an Annuity is one of the most important strategies for retirees who want to protect tax-free growth and turn it into predictable lifetime income. When completed correctly as a trustee-to-trustee transfer, your funds move directly from the Roth IRA custodian to the annuity company—without triggering taxes, penalties, or the 60-day rollover rule. This guide explains how the process works, what to avoid, and how an annuity can complement your Roth IRA plan.
At Diversified Insurance Brokers, our advisors help clients nationwide complete direct transfers every week. We ensure your Roth IRA stays tax-free while helping you evaluate the best fixed, indexed, or income annuity options to achieve reliable, long-term income.
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Why Transfer a Roth IRA to an Annuity?
A Roth IRA provides powerful tax advantages, but it doesn’t offer guaranteed income or market protection. Transferring all or part of your Roth IRA to an annuity can help you:
- Maintain tax-free growth: The annuity continues compounding within the Roth’s tax-free structure.
- Generate predictable income: Lifetime payments can remain tax-free if your Roth meets IRS rules.
- Protect principal: Fixed and indexed annuities safeguard your savings from market volatility.
- Plan for longevity: Eliminate the risk of outliving your Roth balance.
- Leave a tax-free legacy: Beneficiaries can inherit proceeds without income tax.
To see how similar transfers work for other account types, review How to Transfer an IRA to an Annuity.
How the Roth IRA-to-Annuity Transfer Works
The most important step is ensuring your existing Roth IRA custodian sends the funds directly to the new annuity company—not to you personally. This trustee-to-trustee transfer keeps your funds tax-free and avoids the 60-day redeposit rule that applies to indirect rollovers.
| Step | Action | Outcome |
|---|---|---|
| 1. Choose your annuity type | Select between fixed, indexed, or income annuities based on your retirement goals and time horizon. | Aligns your Roth’s growth potential with guaranteed income options. |
| 2. Complete transfer paperwork | Your advisor prepares the forms and coordinates both custodians to ensure a tax-free, compliant process. | Avoids unnecessary reporting or withholding. |
| 3. Funds transfer directly | The check or wire is made payable to the annuity company—not to you. | Maintains Roth tax-free status and prevents IRS penalties. |
| 4. Annuity issued | Once received, the insurer activates your contract and begins compounding interest or index credits. | Your Roth continues growing without current taxation. |
Estimate Lifetime Income from Your Roth IRA
Tax Rules for Roth IRA Transfers
A direct transfer keeps your Roth IRA intact and tax-free. The key is ensuring the receiving annuity is properly coded as a Roth-qualified contract. As long as your Roth has been open for five years and you are over age 59½, withdrawals—including lifetime annuity income—remain tax-free.
Always verify the annuity is titled “Roth IRA” and confirm with both custodians before moving funds.
Benefits of a Roth IRA Annuity
- Tax-free income: Payments are tax-free under qualified Roth distribution rules.
- Lifetime protection: Lock in guaranteed income that lasts as long as you live.
- Market safety: Avoid future downturns while still earning indexed growth.
- Estate control: Pass remaining value to beneficiaries tax-free.
- Flexible timing: Defer income or start immediately depending on your plan.
To compare potential payout options, see How Much Income Does an Annuity Pay?
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FAQs: Transferring a Roth IRA to an Annuity
Is transferring a Roth IRA to an annuity taxable?
No. A direct trustee-to-trustee transfer keeps your Roth IRA tax-free. There’s no taxable event if it stays within the Roth system.
Does a Roth IRA annuity still grow tax-free?
Yes. Your funds continue compounding tax-free inside the annuity, and qualified income remains tax-free when withdrawn.
Can I transfer only part of my Roth IRA into an annuity?
Absolutely. Many clients move just a portion of their Roth IRA to secure guaranteed income while keeping the rest invested elsewhere.
Do Roth IRA annuities have Required Minimum Distributions?
No. Roth IRAs—and Roth-designated annuities—are not subject to RMDs during the owner’s lifetime.
What types of annuities can accept Roth IRA transfers?
Most fixed, fixed indexed, and immediate income annuities can be opened as Roth contracts, provided they’re coded correctly by the insurer.
Will I lose my Roth IRA’s tax-free status?
No. As long as the funds move directly between custodians, your Roth annuity retains the same tax-free growth and withdrawal treatment.
