Ask Terry Questions Annuity or 401(k)?

Annuity or 401(k)?

By Terry Savage on September 26, 2018 | Financial Planning / Retirement

Retired – 65 yrs old – receiving social security. I have an annuity (Prudential) and a 401k (Schwab). Should I roll one into the other? Annuity has reached no penalty surrender. Advice?

Terry Says

If your annuity is outside your 40l(k) you can’t “roll it” into the retirement plan. The money is continuing to grow tax-deferred inside the annuity anyway. The real question is when you should start taking withdrawals from the annuity. Speak to your insurance agent who sold it to you, or contact my annuity expert: Jeffrey Oster (
There may be an optimal age to start taking withdrawals, depending on the annuity itself. And note there is a difference between taking “withdrawals” and “annuitizing.” A lot depends on whether there is a life insurance component for a beneficiary. So you need to ask a pro what’s best to do with the annuity now.
If you don’t need the 40l(k) money, and figure you have a long life ahead of you, you don’t have to start taking withdrawals for another five years. But check on how your 40l(k) is invested. You don’t want to take a lot of risk with it, because time is not on your side, and you won’t be making additional contributions.
It’s time for a financial planner! Consider to find a fiduciary planner.

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