There are two ways to roll over your retirement savings to an annuity: through a direct rollover or an indirect rollover. Direct rollovers occur when you transfer your retirement account funds — within annuity rollover rules — directly into an annuity. Under these circumstances, direct transfers are tax free.
There typically are no tax implications for directly rolling over funds from your traditional IRA or 401(k) plan into an annuity as long as you complete the process within 60 days of the withdrawal.
Indirect rollovers, however, involve withdrawing your funds from a retirement account and depositing them with a bank, and then transferring the funds from the bank into an annuity. Indirect rollovers are more complicated and can have significant tax consequences if not executed properly.
Because there are different rules and tax implications for different rollover scenarios, ‌it’s wise to talk with a tax professional about your specific case.