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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76421  
Subject: Re: Can an annuity be rolled over into an Roth I Date: 5/1/1999 10:58 AM
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fontel,

My sympathies on your purchase of an annuity.

You can only rollover an annuity into a Roth IRA if you are currently holding the annuity in a traditional IRA. If that's the case, you were screwed twice; once with the high fees and second time with the fact that an annuity shouldn't be held in an IRA -- it's already a tax-advantaged vehicle.

If you are holding the annuity in an IRA, you could sell it, but since it's only 2 years old there are probably surrender fees. You usually have to hold an annuity for 6 or 7 years before you can switch out of it without paying surrender charges. You need to calculate the difference between the annual fees you're paying on the annuity and how much you could save on fees in an alternative investment. If the annual fees on the annuity are high enough, it might make sense to pay the surrender charge to get out of the annuity.

If you are NOT holding the annuity in an IRA, you might look at a "1035 exchange." This allows you switch your annuity to a low-fee annuity provider like Vanguard without triggering any taxes. Surrender charges would still apply, so you'll need to make the calculation regarding fees outlined in the paragraph above.

Fool on.

intercst
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