You put an annuity in an IRA? What? I can't believe the annuity IRA debate is still going on. It seems obvious to me which side is right but I am sure that the opposing side feels the same way. Does an annuity belong in an IRA?
If an IRA is tax deferred then why would you need double tax deferral by putting an annuity in an IRA? Or does double tax deferral even exist? And do you pay for it or is it free?
The debate centers around the fees associated with annuities and the double tax deferred idea. Obviously double tax deferred doesn't even make sense so the debate is really just about the extra fees of an annuity versus some other forms of investing. But those other investments have their fees as well. They might be called commissions or internal fees but they are still a cost to your investment.
A question I fail to hear a lot from the people that are fiercely debating the subject is why would you invest in an annuity in an IRA? Why an annuity versus a stock, bond, or mutual fund? Well in the old days before the tech bubble popping in 2000 there really weren't very good reasons to use annuities in IRAs.
Now a days is a completely different story. With income guarantees, principal guarantees, safety concerns, security, long term care options, and all of the other benefits that are offered inside of an annuity it makes complete sense to use an annuity in an IRA.
Learn more about it here.
Image by Andy Tinkham at flickr.com
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