Dave Mello

Dave Mello

Dave has been a wealth strategist since 2000, helping executives, small business owners and retirees to create and maximize their wealth potential by helping them “see the unseen”. His purpose is to explore and analyze the complicated intricacies of each individual or business’ financial situation to design and deliver simple strategies.

Horizon Retirement Advisors, LLC

707 Mount Rose St.

Reno, Nevada 98509

horizon@retirevillage.com (775) 851-4754
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Split your IRA using annuities and keep accumulating


How can a sixty-five-year-old person with $500,000 in an IRA earn guaranteed income, save for the future, and protect themselves against inflation all at the same time?

The simple answer is you can; you can “split” the IRA account, use a portion for income (as for example) for ten years at which time it would end, then defer the second $250,000 for ten years and convert it to income at that time.

This concept is called the Split Annuity and is perfect for a person who wants income now but wants to build a more substantial income in the future as a hedge against inflation.

With the Split Annuity, in this case, I used 50% of the $500,000 and bought an immediate annuity with a company that provides the best-guaranteed income for ten years. The immediate annuity offers an estimated $26,000 a year of guaranteed income for ten years.

With the other half of the IRA, I deposited a Fixed Index Annuity with an income rider that provides a guaranteed 6% bonus on the $250,000 and this amount grows at 6.50% for each year for ten years. (when used as income)

When the first half of the split annuity ends in 10 years, you start the income from the second annuity. This income stream can pay for any period, even a lifetime, and a spouse can be included. A reasonable estimate from the deferred income may be in excess of $30,000 for a lifetime income.

Plus, any unused funds on deposit in either annuity, in the event of premature death, are passed to the named beneficiary. Plus, a designated beneficiary always receives the funds without any need for probate.

Here are the advantages of using the split annuity concept:

  • Income now and income deferred.
  • Current and future income is fully guaranteed.
  • Required minimum withdrawals may be included in the annuity income


The Split Annuity is just another example of how creative and flexible an annuity can be in helping you meet your income goals!



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