Breaking Down Annuity Rollovers

The Mechanics of an Annuity Rollover

By Rafael Onak, InsuranceAgents.com Staff Writer

In the financial world, a rollover has two common meanings. Not only can it refer to the reinvestment of funds once an asset (CD, bond) matures, but it can also refer to the reinvestment of removed funds from a particular qualified plan (401k). So what are the most logical things to reinvest into? One possible destination for your rolled-over funds is annuities -  a contract in which you pay an insurance company in exchange for the promise of an income. To compare multiple annuity rates use our simple online form.

Whether it’s your circumstance, age or goal that changes, there are a variety reasons to why people exchange investments. Of course, we are also very susceptible to making errors in judgment, another reason why an annuity rollover might occur. Many young adults discover that the moment they put money into a CD, they need the funds back to protect against illness, income loss or to support a newborn. It is imperative you feel comfortable with the idea of an annuity rollover to prevent any financial woes in the future.

Annuity Rollover Examples

Annuity rollovers occur more often than one might think. Here are the most common annuity rollover examples:

1. Pension to annuity. Employees who spend a significant amount of time working for a company typically become vested in its pension plan. Once retirement comes along, however, he/she may wish to partake in an annuity rollover instead of taking the pension because, as recent events have displayed, pension plans have a tendency to fall victim to economic misfortune. Keep in mind that annuities are susceptible to economic woes as well; an annuity is only as good as the strength of the insurance company.
2. Mutual funds to annuity. For people looking to change the look of their portfolios by allocating more money to fixed-income investments and less to risky ones, a mutual funds to annuity rollover would do the trick. Not only would this strategy provide you with a safety net, but it would also allow you to benefit from a lifelong income.

Benefit from an Annuity Rollover

If your current CD or bond has or is about to expire, or if your funds were removed from a 401k, consider reinvesting your rolled-over funds into an annuity. If you follow the guidelines of investments, your annuity rollover can place you in a financially comfortable situation. Quickly compare up to five annuity rates using our fast online form.

Published: Wednesday 14th October 2009