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Should I hold an annuity within my IRA?

Probably not a good idea. Since one of the main advantages of an annuity is that your money grows tax-deferred, it makes little sense to hold one in an account like an IRA, which is already tax-deferred. It's a little like wearing a raincoat indoors.

There are a few exceptions. If you're retired or very close to retiring and you feel you need more guaranteed income than social security will provide, it can make sense to use a portion of your 401(k) or IRA money to buy an immediate annuity that will pay income for life.

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