Best Annuity for Nurses with 403(b) and 457(b) (2026)
TL;DR: Hospital nurses often have a 403(b) plus a 457(b) plus sometimes a 401(a) or pension. The 457(b) is the secret weapon — no 10% penalty on early withdrawal after separation. A MYGA ladder placed in the 403(b) rollover and a SPIA bridge from the 457(b) can fund a 58-to-62 income gap without touching Social Security or the 10% penalty zone. Tax-sheltered annuity products inside 403(b) plans are often expensive; rolling out and buying retail MYGAs usually wins by 100+ bps.
Why your situation is different from a corporate 401(k) holder
You have plan options most private-sector workers don't:
- 403(b) — like a 401(k), but with a unique "TSA" (tax-sheltered annuity) flavor. Often loaded with high-fee variable annuity wrappers sold inside the plan.
- 457(b) — governmental or non-governmental. No 10% early-withdrawal penalty once you separate from service. This is huge.
- 401(a) or DB pension — many hospital systems have one or both, often with vesting schedules.
- HSA — if your hospital offers a high-deductible plan, the HSA stacks tax-free on tax-free on tax-free. Most nurses underuse this.
The 457(b) early-access feature is the planning lever for retiring before 59½. Many nurses retire at 58-60 because of physical demands. The 457(b) can fund the gap to 59½ without penalty; the 403(b) and IRA dollars stay sheltered until later.
The hidden problem with your in-plan 403(b) annuity
Many 403(b) plans, especially in religious or non-profit hospital systems, have insurance-company-administered annuity wrappers as the default investment. These products often charge 1.5% to 2.5% in M&E fees plus rider fees, on top of the underlying fund expenses. Total drag: 2.5% to 3.5% per year. Over 25 years that destroys roughly half the balance.
Most participants don't realize they're in a variable annuity wrapper because the menu just shows "Investment Choices." The fee disclosure (DOL Rule 408(b)(2)) is in the plan documents and most participants never read it.
If you have a variable annuity 403(b), check whether your plan allows a 90-24 transfer or in-service exchange to a lower-cost provider (Vanguard, Fidelity, TIAA traditional, etc.). At retirement, roll the whole thing to an IRA and replace high-fee wrappers with low-cost MYGAs or index funds.
The 457(b) bridge: how to retire at 58 and fund the gap to 62
Suppose you retire at 58 with $200K in a 457(b) and $400K in a 403(b). You want to wait until 62 for SS and 65 for Medicare. You need $50K/year for 4 years = $200K of income.
Pull from 457(b) at $50K/year for 4 years. No 10% penalty (457(b) governmental plans allow penalty-free withdrawal after separation regardless of age). Pay ordinary income tax. By 62 the 457(b) is depleted, you claim SS, and the 403(b) is now in an IRA earning MYGA rates of 5.5-6%.
This works because of the 457(b) early-access rule. It does NOT work if your hospital uses a non-governmental 457(b) (private hospitals often do), which has its own rules including being a creditor-exposed asset. Confirm which type yours is.
Top 3 MYGA carriers writing for nurse rollovers in 2026
- Athene — AM Best A+. 5 and 7 year rates at the top of the shelf.
- Corebridge (American General) — AM Best A. Good $100K+ tier rates.
- MassMutual Ascend — AM Best A+. Strong renewal rate history.
If you're a public-system nurse (county, VA, state university hospital), the TIAA Traditional contract inside your 403(b) is worth a careful look before rolling out. TIAA Traditional in some vintages pays 5%+ guaranteed minimum with limited liquidity restrictions (the famous TPA payout). Compare the projected income from TIAA Traditional against a retail SPIA before pulling the trigger.
HSA: the most under-used tool in healthcare retirement
If you've been maxing your HSA at $4,150 (single) or $8,300 (family) for 20 years and investing it, you may have $200K+ in tax-free medical money. After 65, HSA dollars can be used for any expense (taxable, but no penalty). So an old HSA functions essentially like a traditional IRA with the bonus that medical use is tax-free.
For retirement income planning: HSA covers long-term-care premiums tax-free if structured right. Many nurses end up needing LTC themselves (irony). An old HSA can fund LTC premiums for an unrelated LTC policy or hybrid life+LTC product.
Common mistakes nurses make in retirement planning
- Staying in the high-fee 403(b) wrapper after retirement. Roll it. Always. Lower cost almost always wins.
- Cashing out the 457(b) on day one. Spreading withdrawals over 3-5 years usually keeps you in a lower tax bracket and lets the rest compound.
- Skipping the public-employer pension's COLA buyback option. If your hospital pension allows you to buy additional years of service before retirement, the IRR is often 8-12 percent guaranteed. Better than any annuity.
- Treating the SECURE Act 10 year rule as no big deal for heirs. If you leave $500K of traditional IRA to your adult kids, they have to drain it in 10 years — potentially in their peak earning years. Roth conversions during your low-bracket retirement years protect them.
- Buying a hybrid life+LTC policy as a nurse without comparing to a standalone LTC policy + index fund. The hybrid is cleaner, the standalone is cheaper. Nurses, of all people, should price both.
Worked example: $600,000 combined rollover, age 60, hospital nurse
Anna, 60, ICU nurse, plans to retire at 62. Currently has $440K in a hospital 403(b) (with a 1.8% variable annuity wrapper), $160K in a governmental 457(b), $80K in HSA, and a small $14K/year pension from a previous hospital system. Husband still working until 65; takes the health insurance off her plate.
| Bucket | Vehicle | Amount | Purpose |
|---|---|---|---|
| 1. Liquidity | HYSA | $30,000 | Year 1 cushion |
| 2. 457(b) draw bucket | Stays in 457(b), index fund | $160,000 | $40K/yr for 4 years to age 66 |
| 3. 5 yr MYGA, A-rated | Trad IRA (rolled from 403b) | $150,000 | 5.75%, locked to age 65 |
| 4. 7 yr MYGA, A-rated | Trad IRA | $120,000 | 5.90%, locked to age 67 |
| 5. Growth bucket | Trad IRA, index funds | $170,000 | 20-year horizon |
| HSA | HSA, invested | $80,000 | Future medical, then any use after 65 |
The 457(b) bridges age 62-66. SS claimed at 67. MYGA stack provides yield certainty. HSA covers Medicare Advantage premiums and out-of-pocket medical. Pension provides $14K/year baseline.
Related reading
- Best annuity for teachers with a 403(b)
- Best annuity for federal employees rolling TSP
- How much does a $100K annuity pay per month?
- Non-qualified annuity tax explained
- What's the biggest disadvantage of an annuity?
Frequently Asked Questions
Is my 457(b) protected from creditors if I retire from a private hospital?
Non-governmental 457(b)s are technically still assets of the employer until distributed. If the hospital goes bankrupt before you withdraw, you're an unsecured creditor. Governmental 457(b)s (county, state, VA) are creditor-protected like other retirement plans.
Can I roll a 457(b) into an IRA?
Governmental 457(b) yes, to an IRA or another 457/401(k). Non-governmental 457(b), generally only to another non-governmental 457(b) of the same type.
What's a 90-24 transfer?
A 403(b) plan-to-plan transfer that moves your balance between approved vendors within the same plan, without it being a taxable distribution. Useful if your plan menu includes lower-cost vendors than the one your money is currently with.
Should I buy a MYGA inside my 403(b)?
Usually no. Most in-plan 'fixed annuity' options inside 403(b) plans are higher-fee insurance company products. Better to wait until retirement, roll out to an IRA, and buy retail MYGAs with no wrapper fees.
Can I use HSA money to pay for LTC insurance premiums?
Yes, up to age-based IRS limits ($1,690 to $5,960 in 2026 depending on age). Premiums above the limit must be paid from non-HSA sources.
Will the SECURE Act force my kids to drain my IRA in 10 years?
Yes for most non-spouse beneficiaries. The 10-year rule applies to inherited IRAs after 2019. Doing Roth conversions during your lifetime reduces the tax impact on your heirs.
Does my hospital pension have a survivor option?
Most do. You usually elect at retirement. Joint-and-survivor reduces your monthly amount to provide a survivor benefit. Single-life pays more during your life and ends at your death.
Can I keep contributing to an IRA if I'm a nurse working part-time after age 70?
Yes. The SECURE Act eliminated the age cap for traditional IRA contributions. As long as you have earned income, you can contribute regardless of age. RMDs still apply.
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Disclosure
This article reflects publicly available product materials and approximate rates as of the date stated above. Annuity rates, caps, participation rates, payout factors, crediting methods, and tax rules change frequently. Always confirm current values against the most recent carrier disclosure document and the actual contract before purchasing. This article is general information for educational purposes; it is not a personalized recommendation, solicitation, or offer of any specific product, nor is it tax or legal advice. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers across the annuity and long-term care insurance market; specific appointment status with any carrier discussed may vary, and discussion of a carrier is not an endorsement or representation of carrier appointment. No compensation has been received from any carrier in connection with the publication of this article. Always read the actual contract and consult a licensed advisor and a CPA or tax attorney before purchasing any annuity or making rollover decisions. Annuities are long-term contracts with surrender charges; they are not suitable for funds you may need before the end of the surrender period. AM Best ratings, payout factors, and tax treatment are subject to change. References to the TSP, FERS, CSRS, OPM, USPS, Social Security, IRMAA, WEP/GPO, IRC §72, §453, and §1035 reflect rules as of 2026 and are subject to change.