An IRA annuity is an individual retirement account funded by an annuity contract rather than a custodial account. The insurance company is the IRA issuer, and the annuity's features must comply with IRA rules-contribution limits, required minimum distributions, and prohibited transaction restrictions. Owners may choose fixed, indexed, or variable designs within the IRA wrapper. Tax deferral is inherent in IRAs; annuity guarantees are evaluated on their own merits such as income options and principal protection.

Clients open IRAs directly with insurers to purchase fixed, indexed, or variable annuities. Advisors ensure features justify costs beyond IRA tax deferral and coordinate RMDs with income options.