I did, too, a number of years ago. In the cold light of morning, I wish I hadn't, but it isn't the end of the world either. Although the expenses were not grossly high, they were more than I wanted to keep paying. As appears to be your case also, I had no compelling reason to cash out and eat all the penalties. Fortunately, I was able to do a direct annuity-to-annuity transfer without any financial penalty (these transfers have a number associated with them but I forget it). Whether or not you are able to do so at no cost depends on the surrender provisions of your present annuity contract. I found the lowest cost alternatives to be TIAA-CREF and Vanguard. (Vanguard has index funds available within the annuity; TIAA-CREF does not have a true index fund although their overall investment approach is somewhat indexy.) I would echo the advice not to put any new money into the annuity but if you can transfer the existing funds to a low cost annuity that has good fund choices, I see no reason to do anything drastic if you don't need the money now. I don't plan to ever annuitize the annuity; when the time comes I will manage the withdrawals myself. I will also use the funds in the annuity toward the beginning of retirement so as to deplete an account that has a relatively less favorable tax treatment for my heirs in favor of retaining funds longer in accounts that have a relatively more favorable tax treatment. (This goes against the wise advice to let your annuity continue to grow tax deferred as long as possible.)jtmitch
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