The federal funds rate doesn't have much effect on annuity rates; longer-term rates are more relevant.
No. The distributions do not change the total value of the account. So it makes no difference if the distributions occur in the TIRA or the Roth IRA.
Oh, and by the way, you guys are freakin' rock stars.
No. For IRA transactions, only the total income for the year matters.
Do they already have any rental properties?
If not do they want a new part time job?
If they don't want a part time job then sell.
This is at least as much a life style choice as it is a financial choice.