Can annuity income from a Roth be reinvested back into another Roth account tax-free?

18 The answer is actually a bit nuanced. When you purchase an annuity with Roth dollars, you're right that the income it generates will come to you tax-free. However, there's an important distinction to understand. The payments you receive from a Roth annuity are considered distributions, not earnings that can be directly rolled over or transferred to another Roth account. Once money comes out of the Roth environment as a distribution (even tax-free), it loses its special "Roth status" for transfer purposes. You can't do an institution-to-institution transfer of annuity payments back into a Roth IRA. That said, you could potentially take those tax-free annuity payments and make new annual contributions to a Roth IRA, but you'd be limited to the annual contribution limits ($7,000 in 2025, or $8,000 if you're 50+) and you must have earned income to qualify for making Roth contributions.

12 I dealt with a similar situation last year and found a solution through taxr.ai (https://taxr.ai). They specialize in analyzing retirement account rules and transfers, especially for cases like Roth annuities where the rules get confusing. I uploaded my annuity contract and Roth statements, and they provided a detailed analysis of my options. They confirmed that while direct transfers of annuity payments back to a Roth aren't possible as a rollover, there are some strategic approaches depending on your specific annuity type and contract terms. Their tool also helped me understand the difference between annuitized payments versus taking withdrawals from a deferred annuity inside a Roth IRA, which have different reinvestment rules. The analysis saved me from making a mistake that could have triggered unexpected taxes.

9 Just wanted to follow up about my experience with taxr.ai from my earlier question. I decided to try it after getting frustrated with conflicting advice. I uploaded my Roth IRA statements and annuity contract, and their analysis was really eye-opening. They explained that while I couldn't do institution-to-institution transfers of my annuity payments back to my Roth, there were some specific exceptions based on my particular annuity contract that allowed for partial reinvestment through a specific provision. The report included references to specific IRS publication sections that my financial advisor had missed. I took their analysis to my advisor who actually thanked me for bringing this information to their attention! Definitely cleared up my confusion about the "Roth dollars" question.

15 After battling with the IRS for weeks trying to get clarity on Roth annuity rules, I finally found a way to actually speak to a real person at the IRS who could answer my question definitively. I used Claimyr (https://claimyr.com) and was honestly shocked that it worked. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c I had called the IRS regular number about 6 times and kept getting disconnected or waiting for hours. With Claimyr, I got a callback from an actual IRS agent within about 40 minutes. The agent was able to confirm the specific rules around Roth annuity distributions and reinvestment options for my situation. The agent walked me through exactly how the IRS treats annuity payments from a Roth and cleared up my confusion about whether those payments could be transferred to another Roth account.

9 I have to eat my words about Claimyr. After my skeptical comment, I decided to try it myself since I had some complicated questions about my Roth annuity that I couldn't get answered through normal channels. Within an hour, I was actually speaking with an IRS tax specialist who understood the nuances of Roth annuities. She explained that annuity payments from a Roth-funded annuity are considered distributions, not income that can be directly rolled over. But she also pointed me to a specific provision that could apply in my case based on how my annuity was structured. What would have been weeks of back-and-forth with my annuity provider and trying to get through on the IRS line was resolved in one detailed conversation. I'm still surprised it worked so well.

3 Not sure if this helps, but I just went through something similar with my Roth annuity last year. The way it was explained to me by my tax guy is that once the money comes out as payments, it's considered a distribution. Even though it's tax-free because it came from a Roth, it's not considered "Roth dollars" anymore that can be rolled into another Roth account. I ended up just taking the payments and investing them in a regular brokerage account. Not ideal since future gains are taxable, but at least the initial investment and the growth from the annuity itself all came out tax-free.

10 I think people are overcomplicating this. The simple answer is no - you can't take annuity payments and roll them back into a Roth IRA as a transfer. Once money leaves the Roth environment as a distribution, it's just regular money in your pocket (albeit tax-free). The only way to get money "back in" would be through regular annual Roth contributions if you're eligible (have earned income, under the income limits, etc.). It's kind of like asking if you can take your tax refund and roll it into an IRA - you can't roll it in, but you can use that money to make a contribution if you qualify.

I appreciate all the detailed explanations here. Just to add another perspective - I work in retirement planning and see this confusion a lot. The key concept everyone's touching on is correct: once distributions begin from any retirement account (including Roth annuities), those payments lose their "qualified funds" status for transfer purposes. One thing I'd add is that the type of annuity matters too. If you have a deferred annuity *inside* your Roth IRA that hasn't been annuitized yet, you might still have some flexibility to exchange it for other investments within the Roth. But once you start receiving actual annuity payments, those are distributions that can't be rolled back in. The earned income requirement for new Roth contributions is also crucial - if you're retired, even having a spouse with earned income could potentially allow for a spousal Roth IRA contribution using your annuity payments, assuming you file jointly and meet the income limits.