Can Roth Annuity Payments go to another Roth investment?
I have a large Roth Annuity that I will allow to grow to it‘s maximum 20 year guaranteed annuitization value and then begin taking annual payments. At that time, I will be 73 years old and do not expect to need the income in my lifetime. This is a payout for life, and based on my direct ancestors, I fully expect to surpass 100 years of age. I chose annuities purely due to my life expectancy, lifetime payouts, and getting maximum money back with no risk.
My question is if the annual payment can be made directly to another investment institution instead of me, to preserve the Roth status while I am still living? That way I can continue to grow it tax free versus cashing the checks, and investing now as after tax, non-Roth money.
I expect the accumulated payouts to far exceed the annuity accumulation value, so don’t want to roll the entire annuity to just starting a new term on the balance.
Thanks
Permalink Submitted by Alan - IRA critic on Sun, 2020-02-09 21:32
Because a Roth IRA is not subject to RMDs, the monthly payments can be rolled over. However, due to the one rollover per 12 months limitation you would have to arrange for an automatic direct transfer of the payments to another Roth IRA to avoid distributions to you. You can do an unlimited number of direct transfers, which are also not reportable on Form 1099R or your tax return. You might check with the IRA custodian you want to receive these payments to see if they can establish these non reportable transfers on an automatic basis with the insurance company. In other words, this is allowed but not all IRA custodians will support it.
Permalink Submitted by Dave Bowman on Sun, 2020-02-09 21:35
That’s what I was hoping to hear, so I just need to make sure they are annual payments and then set up the account at the institution in advance. Thanks!!
Permalink Submitted by Alan - IRA critic on Sun, 2020-02-09 22:04
Yes, there is some flexibility here for you to reduce the annuity payout frequency to as few as annual, but you might not have to as long as the receiving and issuing custodians can work with more than annual transfers. I don’t know if this setup is used very often, but it might be more frequent with TIRA accounts since transfers can be done without regard to the RMD as long as the total RMD gets distributed from another owned IRA.