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Dear R.I. board,
I originally posted this message over on the Annuities board, which seems to get a little less traffic than this one. So in the interest of maybe getting a few more hits I thought I'd post here, too. Thanks for the great resource.

I have read most of the posts included in the links that begin this board
and I read the recent article on annuities on the start page of TMF. I
understand the consequences of getting out of the annuity that I own. I
have a question, still, on the language of my contract and its meaning.
Thought I'd throw it our there to those experienced in this to see if my
understanding is correct.

First the particulars. I bought a "Flexible Purchase Payment
Multi-Fund Variable Annuity Contract." In April of 1996. I payed a lump
sum of $50000.00 and have not made any additional payments. Its
sales charge schedule goes: 8%, 8%, 7%,6,5,4,3,2,1,0%. So far, it
has been earning 15% cagr. I am not yet 59.5 years old. There have
been no redemptions from this contract.

Now, I will quote from the contract under the heading, "Deduction for
Sales Charges."

"Sales charges are not deducted from purchase payments when
received by us. Instead, we may make deductions for sales charges
from amounts payable upon full or partial redemption of this contract.
We may also make deductions for sales charges from the maturity
value on the maturity date of this contract.

There are, however, three limits on the deduction for sales charges.
These limits are discussed in the next three paragraphs.

The amount we deduct for sales charges at any time, plus any sales
charges previously deducted, will not be more than 8.5% of the total
purchase payments made to that time.

On the first redemption in each Contract Year, and on maturity if no
partial redemption has been made in the Contract Year of maturity, no
sales charge will be deducted on an amount up to 10% of the
accumulated value of the contract on the date of redemption or
maturity. This 10% limit is not cumulative. That is, any unused portion
of this limit cannot be carried over to any later redemption or

[The third paragraph doesn't apply to me.]

Now, my understanding of the above is this; say the value of the
annuity is $84000. I believe that only the first paragraph applies to my
situation since any other sales charge would be greater than the 8.5%
on the only purchase payment of $50000. IOW, I will pay only $4250 in
total sales charges.

What do you guys think?

One other question is: will state and federal taxes be deducted at the
time of redemption or will they be due by April 15 in the year following
the redemption?

Thanks for a great board and your help in understanding contract
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