QJSA
I have the option to elect to annuitize my old 401k into a Qualified Joint and Survivor Annuity for me and my spouse.
If I roll the 401k into an IRA, am I able to purchase a QJSA with that IRA if I choose? Or is this option only for specific retirement plans?
Thanks!
Permalink Submitted by Alan - IRA critic on Thu, 2023-06-01 00:56
You could purchase such an annuity in an IRA as well. Note that if you will receive SS benefits, those are basically life annuities with a COLA, so be aware of the opportunity costs of annuitizing a very high % of your assets. But if you are interested in additional annuities you should get a quote from your 401k as well as an IRA annuity quote. Note that such annuities generally are treated as RMDs, even prior to your normal RMD age, so none of the payments are eligible for rollover.
Permalink Submitted by Colin O on Thu, 2023-06-01 01:03
Appreciate your response! Are there any major differences in a QJSA in a 401k and a joint and survivor annuity I can buy in an IRA? Or is it just going to be whichever company offers better terms on the annuities? I’m just not seeing a lot online on joint annuities in IRAs. Thanks for the clarification!
Permalink Submitted by Alan - IRA critic on Thu, 2023-06-01 15:34
There are no basic differences, but 401k QJSAs are subject to more regulations in the tax code, and are a required option. An IRA annuity is an optional contract that must be requested after transferring all or a portion of your IRA to an insurance company custodian. You don’t hear much about annuitized IRAs because very few people have purchased them over the years. As such, the companies may be more inclined to be less competitive as they would expect that you (or spouse) are anticipating a much above average life expectancy.