What is an annuity, in plain terms?
A contract with an insurance company. You hand over a sum of money, and in exchange the company promises income, either starting now or starting on a date you pick. A fixed annuity credits a set rate. A fixed indexed annuity credits interest linked to an index, with a floor so a bad year does not reduce your principal, and a cap or participation rate that limits the good years in return.
The honest trade is liquidity. Most of these contracts carry a surrender charge for a set number of years, so money you might need next year does not belong in one. What you are buying is a promise about income you cannot outlive, and you are paying for it with access.
I am retiring with a 401(k). What can I actually do with it?
Four things, and they are worth knowing before anyone recommends one of them. You can leave it in your employer's plan, if the plan allows it. You can roll it into a new employer's plan. You can roll it into an IRA. Or you can cash it out.
Two mechanics catch people. A direct rollover moves the money between institutions and nothing is withheld. If a plan instead pays the money to you, even when you intend to roll it over within sixty days, the plan is generally required to withhold twenty percent under section 3405(c) of the Internal Revenue Code, and you have to make up that twenty percent from your own pocket to complete a full rollover. Separately, the limit of one rollover per twelve months applies only to sixty day rollovers between IRAs. It does not apply to trustee to trustee transfers, plan to IRA, IRA to plan, or plan to plan.
Can you tell me whether to move my 401(k)?
No, and it matters that we say so rather than let you find out later. We can explain the four options above, and we can sell you an annuity funded with money you have decided to roll over. We cannot advise you on the securities inside your plan: which funds to sell, whether your lineup is expensive, or whether you should be out of the market.
That is not modesty, it is the licence. California Insurance Code section 10509.9204(a)(1)(L) says an insurance licence is enough to sell an annuity, provided the producer does not give advice or provide services that are otherwise subject to securities laws. Advice about selling securities sits on the other side of that line, and it belongs with your plan administrator, your existing broker, or a registered investment adviser. Any agent who is willing to tell you to liquidate a portfolio is telling you something about how they treat lines they should not cross.
What does California require of the agent selling me an annuity?
Since 1 January 2025, a best interest standard. Under Insurance Code article 9.5, added by Senate Bill 263, a producer recommending an annuity owes you four obligations: care, disclosure, conflict of interest management, and documentation. Care includes having a reasonable basis to believe the contract actually benefits you, and communicating why, both out loud and in writing.
The part worth using is the disclosure. Section 10509.9204(a)(2)(B) says that on request from you or someone you designate, the producer shall disclose a reasonable estimate of the cash compensation they will receive, which may be given as a range or a percentage, and whether it is one time or recurring. You are entitled to ask what we get paid, and we have to answer. Ask every agent you talk to, not only us.
Two things we will not claim, because they are not true. This standard is not a fiduciary relationship, and section 10509.9200 says the article does not create a private cause of action. An agent who tells you they are your fiduciary because of the annuity rules has misread the statute.
How long do I have to change my mind?
If you are sixty or older on the date of purchase, at least thirty days from when you receive the contract. Insurance Code section 10127.10 requires that notice to be printed on the front of the policy jacket or the cover page, and the period the insurer sets cannot be shorter than thirty days.
Two details people miss. Thirty days is a floor, not a ceiling, so read the notice for the period your insurer actually set. And you may return the contract to the insurer or to the agent who sold it to you, which means you are never dependent on the agent staying reachable.
One warning about immediate annuities. If the contract has already started paying income, returning it after the cancellation period may not get your money back in any form other than the annuity payments themselves. Never treat an immediate annuity as liquid once the window closes.
Someone suggested I replace the annuity I already have. What should I know?
That a replacement is the transaction where the interests diverge most sharply, and California knows it. The care obligation requires a producer to consider whether the new contract actually confers a substantial benefit over the life of the product, and whether you have already exchanged or replaced an annuity within the preceding sixty months.
Sixty months is the California insurance lookback. It gets confused with the thirty six month figure in FINRA Rule 2330, which applies to deferred variable annuity exchanges and is a different rule in a different regime. If someone quotes you thirty six months for a fixed annuity replacement in California, they are quoting the wrong one.
Do these rules cover every retirement account?
No, and the exceptions matter a great deal in Los Angeles. Section 10509.9202 puts several transaction types outside the best interest article entirely, including contracts funding an employer established plan under Internal Revenue Code sections 401(a), 401(k), 403(b), 408(k) or 408(p), and deferred compensation plans of state or local government under section 457.
In practice that means a teacher's 403(b) and a city or county employee's 457 plan can sit outside the article, depending on how the contract is being used. That is not a reason to avoid those conversations. It is a reason to ask any agent directly whether the protections they are describing actually apply to your account, and to get the answer before you sign anything.