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Author: jesserivera67 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Re: Annuities in an IRA Date: 9/22/2003 11:28 AM
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GREAT ALTERNATIVES?!? Definitely good for advisor. My personal opinion having parents who have been completely burned by their advisor is to ABSOLUTELY IN NO WAY SHAPE OR FORM GO FOR AN ANNUITY AND ESPECIALLY DO NOT ROLLOVER YOUR IRA INTO ONE!!!

There is no excuse for this and it should be considered a criminal act. I have learned a tremendous amount from my fellow fools on this issue. Not sure of your situation but if you're trying to prepare for your retirement:

1) Are you maxing out your 401k?
2) Are you maxing out your IRA/ROTH IRA?
3) If you're married are you maxing out your wife's IRA?

If your single this means potentially up to $16,000 saved per year and $19,000 per year if you're married in 2004.

Some say after the above you might then want to check into an annuity...I disagree. With the tax law changes in 2003 and if you are a buy and hold kind of guy (which I highly recommend) you have 15% tax on long term capital gains as well as dividend pay outs. Invest is some index funds at Vanguard, diversify, and let it grow. Index funds are very tax efficient due to their low turnover.

I can't emphasize enough to stay away from an annuity. The fees will range anywhere from 2% on up. Why pay that when you can sign up for an IRA at Vanguard and pay an average of say .35%? That's a 600% savings on fees alone!

The advisor will say things like, "Well an annuity will guarantee your return and give out the maximum benefit should you die." Ah, baloney...their "guaranteed" return comes at a hefty price and you can do just as well on you own.

Once you sign up you'll also be stuck for at least 7 years and if you decide to change later you'll get nailed with surrender charges that could be as high as 10%!!!

Best of luck...


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