Which type of annuity allows contributions to an IRA?

A deferred annuity is the type that allows contributions to an IRA. This type of annuity is designed to accumulate funds over time, typically through regular contributions made by the annuitant. When set up as an IRA, the deferred annuity benefits from tax-deferred growth, meaning that the earnings are not taxed until they are withdrawn, typically during retirement when the annuitant may be in a lower tax bracket.

The flexibility of making contributions over time while enjoying tax advantages makes the deferred annuity particularly conducive for retirement planning within the IRA framework. This is significant for individuals looking to maximize their retirement savings while taking advantage of potential market growth or fixed income options, depending on how the annuity is structured.

In contrast, other types of annuities, such as fixed, immediate, or variable annuities, do not inherently facilitate contributions to an IRA in the same manner or context as deferred annuities. Immediate annuities typically start paying out almost immediately after a lump-sum payment and are not designed for ongoing contributions. Fixed and variable annuities can act as investment vehicles, but they do not specifically highlight the provision for IRA contributions as a core feature like deferred annuities do.