At retirement, a lot of folks perform a rollover IRA (a TIRA, with the rollover name for tracking purposes - held separately from any other TIRA) and purchase an SPIA from that source.You don't need to buy the annuity inside the 401k account? Or is there a special IRA annuity? Just withdraw from a 401k and buy any old annuity?
upon retirement. Anyone know about the tax ramifications? I thought I read I am not tax upon withdrawing the lump sum if it goes into an annuity. Did I read it right?
Generally the insurance company that you are buying the annuity from will create a transfer IRA annuity account for you that you can transfer/rollover your IRA/401K funds to. Then they will take the money out of the IRA annuity fund to purchase the annuity. Just need to be clear if the funds being transferred are qualified or not.
Then All the monthly payments to you from the annuity are taxable at the normal rate, yes? Assuming you are over 59 1/2. One question is are the taxes due to the USA? Even if you live outside the USA taking distributions?
SWR
The tax rules are complicated for US citizen living outside the country. But in general Uncle Sam taxes you no matter where you live. You may (or may not) get credit for tax paid to the host country. My guess is in most cases for annuity payment from an IRA/401 you won't owe any taxes to the host country but would owe them to Uncle Sam.