Many American workers have assets in one or more employer-sponsored retirement plans (i.e., 401(k), 403(b), profit-sharing plans) to help save for the future. But what happens if you change jobs? Oftentimes, these accounts don’t come with you, so they are set aside to deal with later – in fact, an estimated 1 in 5 U.S. workers have left behind or forgotten retirement accounts.

While the funds in the account still have the potential to grow, they’re usually considered inactive if you’re no longer employed by the company. And if you experience several job changes throughout your career, you could find yourself trying to keep track of several accounts. This could make it difficult to know if you’re on track with your retirement savings goals and ensuring you’ll have enough income down the road. One option to help you stay in the driver’s seat is to roll over your non-contributing 401(k) into a fixed indexed annuity (FIA).

Benefits of an annuity

When you make contributions to a 401(k), you will not owe taxes on these funds or any earnings in the account until you withdraw the money. A FIA can also provide tax deferral and growth potential, along with insurance against the risk that you’ll outlive your money after you retire. They give you the potential to grow your retirement savings, help manage the risk of loss due to market downturns and can create a guaranteed income stream for the rest of your life.

A fixed indexed annuity can provide the added benefits of:

• Protection from loss due to market downturns
• Guaranteed lifetime income¹
• Flexibility to customize income
• Creating a legacy

Rolling over tax-qualified retirement assets into an annuity can help you achieve your retirement goals, while also providing you with additional features for creating a well-rounded financial plan. Let’s take a closer look at each of these benefits.

Growth potential

A fixed indexed annuity has the potential to grow your money while also helping manage the risk of loss. It offers growth potential based, in part, on the upward movement of an external market index.² 

Continued tax deferral

Rolling over your 401(k) is tax free as long as you follow IRS guidelines. You won’t pay taxes on any growth in your annuity until you’re ready to withdraw money, typically when you reach retirement.³

Protection from market downturns

Since a FIA does not directly participate in any stock or equity investments, your principal is protected from loss due to market downturns. Although you may earn zero percent interest in any given term period, you’ll never earn less than zero. In exchange for this protection, indexed crediting strategies limit the interest you can receive, which may include a Cap Rate, an Annual Spread, and/or a Participation Rate.

Guaranteed lifetime income

Living a long life in retirement can certainly be a blessing, but it can also be a challenge to ensure you have enough income to go the distance. An annuity can create a guaranteed stream of income in retirement and supplement income from Social Security, retirement plans and other savings vehicles. If you choose a FIA, it may include or offer optional riders that provide lifetime income, so you can be protected from outliving your savings and can gain greater peace of mind about your future financial well-being.

Flexibility

Along with guaranteed lifetime withdrawals, a FIA may have an income rider that offers additional benefits, such as inflation protection, a death benefit or living benefits for confinement or terminal illness.⁴ You also typically have access to a least a portion of your money without incurring a Withdrawal Charge.

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