Yes — you can buy an immediate annuity (SPIA) with traditional IRA, Roth IRA, or 401(k) money, and it is how most of our clients fund one: 24 of the 37 quote surveys we ran in August 2026 were IRA money. The premium moves by trustee-to-trustee transfer or direct rollover (never a 1035 exchange), nothing is taxed at transfer, and each payment is then ordinary income (traditional) or tax-free (qualified Roth). Rates are identical to non-qualified money: as of August 2026, a 65-year-old man with $100,000 of IRA money gets up to $675/month, single life with a 5-year period certain, from actual carrier quote surveys. The complication is required minimum distributions — covered below, including the SECURE 2.0 election.
What IRA Money Buys: Current SPIA Quotes
Insurers price a qualified SPIA on age and sex, not the tax status of the money. Best of the 8 A-rated carriers we quote — single life with a 5-year period certain, per $100,000, from actual carrier quote surveys (August 2026); joint is 100% to the survivor, both spouses the same age.
| Age | Male / $100,000 | Female / $100,000 | Joint / $100,000 | Male / $250,000 IRA |
|---|---|---|---|---|
| 60 | $627/mo | $612/mo | $567/mo | $1,568/mo |
| 65 | $675/mo | $637/mo | $587/mo | $1,688/mo |
| 70 | $751/mo | $699/mo | $640/mo | $1,878/mo |
| 75 | $873/mo | $810/mo | $722/mo | $2,183/mo |
| 80 | $1,041/mo | $962/mo | $837/mo | $2,603/mo |
Best available quote among 8 carriers, August 2026. Full tables: male, female, joint; try your own premium in the calculator or see what $250,000 pays.
How the Transfer Works, Step by Step
- Get quotes and pick the payout option — same as any SPIA (see payout options). The application simply marks the plan type: traditional IRA, Roth IRA, SEP, or 401(k) rollover.
- The insurer issues the contract as an IRA. A qualified SPIA is an individual retirement annuity under IRC 408(b) — issued in your name, nonforfeitable, non-transferable, distributions beginning by April 1 of the year after you reach 73 (75 if you were born in 1960 or later) — your required beginning date (Pub 590-A).
- Your custodian sends the money straight to the insurer. This is a trustee-to-trustee transfer: per Pub 590-A it “isn't a rollover,” nothing is distributed to you or withheld, and it does not use up your once-per-12-months IRA rollover. In our experience, allow two to four weeks from signed application to first scheduled payment; paper forms and signature guarantees are the usual delay.
- 401(k) money uses a direct rollover. The IRS rollover rules require your plan to offer a direct rollover to an IRA — which includes a 408(b) annuity — with no withholding; if the plan pays you instead, 20% is withheld and you have 60 days. The year's RMD can never be rolled.
- It is not a 1035 exchange. Section 1035 covers non-qualified contracts; qualified money moves under IRC 402(c) and 408(d)(3) (NAPA summary of the IRS position).
Worked Example: A 73-Year-Old Puts $150,000 of a $400,000 IRA Into a SPIA
Our best surveyed male quote is $751/month per $100,000 at 70 and $873 at 75, so a 73-year-old lands at about $824 per $100,000 (straight-line between the two). On $150,000 that is about $1,236/month, roughly $14,832 a year, for life (first five years guaranteed to his beneficiary). The remaining $250,000 stays invested. Now the RMD side.
| Item | Amount |
|---|---|
| Traditional IRA before purchase | $400,000 |
| SPIA premium (transferred to insurer) | $150,000 |
| SPIA income (about, August 2026 best quote) | ~$1,236/mo · ~$14,832/yr |
| Remaining IRA balance | $250,000 |
| Uniform Lifetime Table factor, age 73 | 26.5 |
Year of purchase. The RMD is figured on the prior December 31 balance — the whole $400,000 — so $400,000 ÷ 26.5 = about $15,094. Under Treas. Reg. 1.401(a)(9)-5(a)(5)(ii), SPIA payments received in the purchase year count as distributions from the account, so ten or eleven monthly checks cover most of it and the IRA supplies the small remainder.
Every later year — two ways to compute it. The default rule (“bifurcation”) treats them separately: the SPIA satisfies its own RMD by paying, and the IRA owes $250,000 ÷ 26.5 = about $9,434 — total forced out about $24,266. The SECURE 2.0 election combines them: add the annuity's year-end value (reported on Form 5498; assume roughly the premium in year one, declining thereafter) to the IRA balance, divide once, subtract the annuity payments received that year. ($250,000 + $150,000) ÷ 26.5 = about $15,094, minus ~$14,832 of SPIA payments = about $262 owed from the IRA. Same income, about $9,172 less forced out of the IRA that year. Factor and reported value change annually, so treat this as the shape of the math, not a fixed result.
| RMD path after a partial annuitization | Default (bifurcation) | SECURE 2.0 §204 election |
|---|---|---|
| Annuity contract | Payments satisfy the contract's own RMD (Reg. 1.401(a)(9)-6) | Prior-12/31 value added to the IRA balance |
| Remaining IRA | Balance ÷ factor; annuity payments do not count | (Balance + annuity value) ÷ factor, minus annuity payments received that year |
| Our example | ~$9,434 from the IRA | ~$262 from the IRA |
| Authority | Reg. 1.401(a)(9)-5(a)(5)(iii); Pub 590-B | Reg. 1.401(a)(9)-5(a)(5)(iv), 1.408-8(e)(1)(ii) (T.D. 10001); Pub 590-B |
The RMD Rules That Matter for an IRA SPIA
Required beginning date. Under SECURE 2.0 section 107 the RMD age is 73 for anyone who reached 72 after 2022, rising to 75 for those born 1960 or later (the statute is ambiguous for 1959 births; proposed regulations say 73). The first RMD is for the year you turn 73 and can be delayed to April 1 of the following year (IRS FAQ); every later RMD is due by December 31.
The annuity must be paying by that date. Reg. 1.401(a)(9)-6(a)(3) requires payments to commence on or before your required beginning date, and the first payment must be a full payment interval. A SPIA starts within a month, so this is rarely a problem — just never schedule the first payment after April 1 of your RBD year.
The election is final law; the valuation detail is not. The core rule — T.D. 10001, effective for 2025 and later distribution years — is final and Pub 590-B describes it. How the annuity's fair market value is fixed remains proposed; IRS Announcement 2026-7 says to apply a reasonable good-faith interpretation until final rules land — in practice, the value on Form 5498. Three limits: for IRAs the election is yours as owner (inherited IRAs aggregate only with same-decedent inherited IRAs; Roth never aggregates with traditional); for 401(k) money the plan must permit it; and a 401(k) can never be aggregated with an IRA.
Qualified vs. Non-Qualified: The Same Check, Taxed Differently
Take a 65-year-old man with $100,000. IRA or brokerage account, the best August 2026 quote is the same $675/month ($637 for a woman, $587 joint). From a traditional IRA with no nondeductible contributions, all $675 is ordinary income — with no basis, Pub 590-B says distributions are “fully taxable when received,” taxed as payments arrive, not at purchase. From after-tax savings, the exclusion ratio treats part of each payment as a tax-free return of premium over your life expectancy, so only the balance is taxed — see How Are Annuities Taxed and IRS Pub 575. No reason to avoid IRA money — the tax was always coming due — but it is why, if you hold both, the IRA is usually the account to annuitize first.
Roth IRA Money in a SPIA
A Roth SPIA is the cleanest version: same quote, and every payment is a tax-free qualified distribution provided the Roth has been open five tax years and you are 59½ or older (Pub 590-B). Roth IRAs have no lifetime RMDs, so none of the mechanics above apply while you are alive. New York Life, for example, issues Roth contracts at ages 59½–89 and requires the Roth to be at least five calendar years old before the year income starts (New York Life Guaranteed Lifetime Income Annuity II fact sheet).
Sidebar: SPIA vs. QLAC Inside an IRA
| SPIA (immediate) | QLAC (deferred) | |
|---|---|---|
| Income starts | Within about 12 months | As late as the month after your 85th birthday |
| Premium limit from IRA/plan money | None beyond carrier maximums | $210,000 lifetime across all QLACs (2026, Notice 2025-67; unchanged from 2025) |
| RMD treatment | Payments must start by the RBD; payments satisfy the RMD (or count under the §204 election) | Excluded from the RMD base until payments begin |
| Contract must say | Nothing special | “Intended to be a QLAC” (Reg. 1.401(a)(9)-6(q)) |
QLAC status only matters if you want to defer income past your required beginning date. Need income now? SPIA. Want longevity insurance starting at 80 or 85 that shrinks your RMD base meanwhile? QLAC, up to the $210,000 cap.
State Premium Tax on Qualified Money
Few states tax annuity premiums; California matters most. Cal. Rev. & Tax. Code §12202 taxes premiums at 2.35%, but only 0.50% on contracts issued in connection with plans under IRC 401(a), 403(b), 404, 408(b) or 501(a) — and 408(b) is the individual retirement annuity, so an IRA-funded SPIA gets the reduced rate: on a $150,000 premium, roughly $3,525 versus $750 off the top. We confirm each carrier's practice on every California quote. Other premium-tax states reportedly waive or reduce it for qualified money (secondary source: Annuity.org) — verify before you buy.
Common Mistakes
- Taking a check instead of a transfer. An IRA distribution paid to you has 10% withheld unless you elect out, a plan distribution 20%, and you have 60 days to redeposit the full amount or the shortfall is taxable. Always transfer.
- Blowing the one-rollover-per-year rule. A 60-day IRA-to-IRA rollover is allowed once per 12 months; a second becomes a taxable distribution. Trustee-to-trustee transfers do not count.
- Annuitizing the whole IRA. A SPIA is irrevocable. Cover the essentials — see annuity vs. Social Security for sizing — and keep liquid IRA money for the unplanned.
- Missing the required beginning date. Payments must be flowing by April 1 of the year after you turn 73 (75 if you were born in 1960 or later).
- Assuming your custodian does the SECURE 2.0 math. Custodians report values; the election and arithmetic are yours (or your CPA's). Keep the Form 5498.
Bottom Line
IRA and 401(k) money is the natural source for an immediate annuity: it moves tax-free by transfer or direct rollover, and since 2025 the SECURE 2.0 election lets a well-sized SPIA carry most of the RMD load for the rest of your IRA. Annuitize the traditional IRA first, let the Roth grow, never annuitize everything. Request a free comparison quote — tell us the account type and we run all 8 A-rated carriers on a qualified basis for your age and state — or size the premium with the calculator and our current best SPIA rates.
