A roll-up rate is the guaranteed annual percentage a carrier adds to the income base of an income rider during the years you delay taking withdrawals, separate from your actual account value.
What is a roll-up rate?
When you attach an income rider to an annuity, the carrier tracks two separate numbers: your real account value and a separate income base used only to calculate your future lifetime withdrawals. A roll-up rate is the guaranteed percentage the carrier adds to that income base every year you wait before turning on income. Roll-up rates commonly fall between 4% and 8%, and the growth can compound or apply simply, depending on how the rider is built. The roll-up never touches your actual cash value. It only inflates the number used later to set your income payments.
Simple vs. compound roll-up rates
A simple roll-up calculates its growth off your starting premium every year, so the dollar amount added never changes. Put $100,000 into a rider with a 7% simple roll-up and you add $7,000 to the income base annually, landing at $170,000 after a decade. A compound roll-up instead grows off the prior year's income base, so the dollar amount added gets larger each year. That same 7% rate, compounding for 10 years, reaches $196,715, nearly $27,000 more than the simple version. Compound roll-ups produce the bigger number every time, which is exactly why carriers tend to reserve them for riders with shorter deferral windows.
When roll-up rates stop growing
A roll-up does not run forever. It stops the moment you take your first lifetime withdrawal, once you hit a maximum age the contract sets, often 85, or after a maximum number of deferral years, often somewhere between 10 and 20. Once that trigger hits, the income base is locked, and the withdrawal percentage you activate at that point determines your income for life. Before you buy a rider for its roll-up rate, confirm exactly how many years it runs and what stops it. Our income rider calculator can model the income base under both simple and compound growth so you can compare products side by side.
Frequently asked questions
What is a roll-up rate?
It is the guaranteed annual percentage a carrier credits to an income rider's benefit base while you delay withdrawals. It grows only the income base, not your actual account value.
How do simple and compound roll-up rates differ?
There are two versions. One, labeled simple, adds the same dollar figure every year, calculated off your original premium. The other, labeled compound, adds a larger figure each year, calculated off the prior year's income base, so it always finishes ahead over the same stretch of time.
When does a roll-up rate stop growing?
It stops as soon as you take your first lifetime withdrawal, once you reach the contract's maximum roll-up age, or after its maximum number of deferral years, whichever happens first.
Written and reviewed by
James Forren Warren
Licensed Retirement Income Strategist · License #20551202
James Forren Warren is a licensed Retirement Income Strategist with Tax Free Wealth Plan. For the past five years he has helped individuals and families turn their savings into retirement income they can count on. He writes and reviews the annuity research on this site and keeps it plain: what a product does, what it costs you, and who it actually fits.
Educational only, not investment, tax or legal advice. Tax Free Wealth Plan LLC is a licensed insurance agency, not a registered investment adviser or broker-dealer. Annuities are not bank deposits, are not FDIC insured and are not guaranteed by any government agency. Guarantees are backed solely by the claims-paying ability of the issuing insurance company. Features, rates and availability vary by state and change over time; the contract and disclosure documents govern.