1. What is IRA Annuity Rollover?

An IRA annuity rollover involves transferring funds from an Individual Retirement Account (IRA) into an annuity contract, providing guaranteed lifetime income through regular payments based on the account balance and payout factors.

2. How Does the Calculator Work?

The calculator uses the annuity value formula:

Where:

• \( \text{IRA Balance} \) — Total amount in the IRA account ($)
• \( \text{Payout Factor} \) — Decimal representing the annual payout rate
• \( \text{Annuity Value} \) — Estimated annual annuity payment ($/year)

Explanation: The payout factor is determined by factors such as age, life expectancy, interest rates, and the specific annuity product terms.

3. Importance of Annuity Calculation

Details: Accurate annuity calculation helps retirees plan their income streams, ensure financial stability during retirement, and make informed decisions about IRA rollovers and retirement planning strategies.

4. Using the Calculator

Tips: Enter IRA balance in dollars, payout factor as a decimal (e.g., 0.05 for 5%). Both values must be positive, with payout factor typically between 0.04 and 0.08 for most annuity products.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical payout factor range?
A: Payout factors typically range from 4% to 8% annually, depending on age, annuity type, and current interest rates.

Q2: Are annuity payments guaranteed for life?
A: Most annuity rollovers offer lifetime payment guarantees, but terms vary by provider and product type.

Q3: What are the tax implications of IRA annuity rollovers?
A: Direct rollovers from IRA to annuity are generally tax-free, but annuity payments are taxable as ordinary income when received.

Q4: Can I change my annuity after rollover?
A: Most annuity contracts are irrevocable once established, so careful consideration before rollover is essential.

Q5: How does age affect payout factors?
A: Older individuals typically receive higher payout factors due to shorter life expectancy and higher mortality credits.