Originally Posted by mystang52
But I presume the cost would be substantial - to the point where I'd have to pull substantial money out of my rollover IRA's to pay that premium...and pay big taxes on that lump sum withdrawal.
No, you don't have to pay taxes on an annuity purchased with "qualified funds", such as an IRA or 401(k) rollover, assuming the annuity company accepts qualified funs.
Each monthly payment is fully taxable and you have the option (under most plans) to have taxes taken out at the rate you specify, or pay at the end of the year.
If you happen to purchase an annuity with pre/post tax funds, only a portion of the monthly payment will be taxable, and noted as such on your annual 1099 provided by the annuity vendor.
Also remember that the qualified funds you use for an annuity will not be subject to RMD's when the time comes, if the annuity is specified as a "life annuity" either for you, or jointly with your spouse.
Taxes are the same as a withdrawl against a TIRA, assuming you use 401(k) or TIRA funds to purchase the annuity. They are only due at the time of withdrawl, or annuity payment, not at the time you purchase the annuity.
Again, be sure the annuity company you are considering accept qualified funds
. Some, like Berkshire will only accept non-qualified funds. You would indeed have to pay taxes up front to use one of their plans. They seem to be the exception in the annuity providers but you should be aware of the existance of such providers.