Annuities are a common retirement planning investment vehicle. If a person has an annuity through his employer and then leaves the company, he is entitled to take this account and obtain investment control over it. In doing so, it is best to convert this into an IRA to prevent paying taxes prematurely. Money taken out of an annuity or IRA before age 59 1/2 will have penalties assessed by the IRS. Money taken out of the account after age 59 1/2 is added to annual adjusted gross income.
Get your existing annuity statement from your employer. Request rollover paperwork from your employer's annuity trustee to do a rollover IRA. (Annuities often require paperwork from both the new IRA rollover trustee and the employer's trustee confirming the amount the employee is vested for.)
Find a new IRA trustee. This can be found at your local bank, a brokerage firm you have other accounts at or an online trading company. Examples of IRA trustees are Chase Bank, Merrill Lynch or E*Trade.
Complete the paperwork for a new account and rollover paperwork. Make sure the new account has your name, address and Social Security number listed exactly the same as the original statement, otherwise this can impede the rollover. Make 2 copies of this paperwork along with the completed paperwork from Step 1.
Send each trustee its respective original paperwork with a copy of the paperwork from the opposite trustee. Rollover paperwork obtained in Step 1 should be sent directly to the annuity trustee with a copy of the new trustee's rollover form. The original new account and rollover paperwork from Step 3 should be sent to the new trustee with a copy of the paperwork from the annuity company.
Follow up with both trustees to makes sure all paperwork has been received and is in good order. A check will be sent from the annuity company that needs to be deposited into the new IRA within 60 days to qualify as a tax-free rollover.
With more than 15 years of professional writing experience, Kimberlee finds it fun to take technical mumbo-jumbo and make it fun! Her first career was in financial services and insurance.