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Author: razuli Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19483  
Subject: tranfer annuity ? Date: 4/1/2000 9:22 AM
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Three year back, before I had met TMF, I purchased an annuity 100% vested in the S&P 500. While the 3% earnings is compounded, the payment based on the S&P is not.

Does any one have information on how to move the funds to something that compounds at a higher rate, without of course having a tax liability ?

I am soon 55 so I have a few years for a TD investment to grow.

Sure wish I could put the above into my Roth <sigh>
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Author: peppermintpatty Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3334 of 19483
Subject: Re: tranfer annuity ? Date: 4/1/2000 10:51 AM
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razuli - You said:

"Three year back, before I had met TMF, I purchased an annuity 100% vested in the S&P 500. While the 3% earnings is compounded, the payment based on the S&P is not. "

Huh?

3% earnings on a fund invested in S&P 500... that doesn't fly! You need to review the terms of that annuity with a rep/agent from the company to get the whole story. If you don't have better options available in that annuity, you may consider a tax-free exchange to another!

Good luck, PP





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Author: kingfool1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3345 of 19483
Subject: Re: tranfer annuity ? Date: 4/1/2000 10:55 PM
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razuli - you said:

"Does anyone have information on how to move the funds (i.e. annuity) to something that compounds at a higher rate, without of course having a tax liability ?"


Here are a couple of suggestions for you to consider:

a) Move to a New Insurance Company:

It sounds as if you may own a non-qualified annuity (e.g. not owned within an IRA). If so, you can typically do a 1035 tax-free exchange and exchange your existing annuity for a new one at a different insurance company. One important thing to find out is whether there are "early surrender or withdrawal charges" on your existing policy. These can often last up to 5 to 7 years from the date you purchased the annuity, but the penalty rate typically declines with each passing year. I suggest you check your policy or speak to the person who sold you the annuity to find this out.

b) Stay with the Existing Insurance company:

If your existing annuity is a variable annuity, you should be able to switch to another sub-account that has different investment objectives. You will need to check whether these other sub-accounts better meet your goals. This should be a tax-free exchange as it is within the same annuity.

If your existing insurance company has another different annuity whose returns are closer to what you are looking for, you may want to consider a tax-free 1035 exchange into this new annuity.

PLEASE NOTE THAT IF YOU DO A 1035 EXCHANGE INTO A NEW ANNUITY, YOU WILL TYPICALLY GET A NEW SET OF "early surrender or withdrawal charges". You should consider when you will need to withdraw the money in your annuity, before taking on a new set of surrender charges. There are some annuities out there with no "early surrender or withdrawal charges", but you may have to do some research to find them.

Hope this helps!

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Author: razuli Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3433 of 19483
Subject: Re: tranfer annuity ? Date: 4/6/2000 3:21 PM
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Dear Peppermintpatti,
Thank you for answering my post.
The account is an indexed annunity that grows at 3% until it matures in 2004 At the date of maturity it is credited with 100% of the average of the Weekly S&P 500 during 13 weeks prior to the date of maturity.

This sounded good when I bought it but now I know that it would be better if the money was compounding over the life of the seven years.

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Author: razuli Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3434 of 19483
Subject: Re: tranfer annuity ? Date: 4/6/2000 3:37 PM
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Dear kingfool1.

Thank you for your response about my annunity (it is with a unsurance co)

My question has two parts.

1) when I reach 65.5 I would like to move my 403B and the above mentioned annuity into a TDA IRA and thereby just pay taxes on the amount that I am withdrawing.
I could probably leave it there for some time because the bulk of my savings has been transfered to a Roth.

2) The insurance annuity goes like this. It is compounded at 3% until it matures in 2004. At that time it is credited with "the average of the weekly S&P during the 13 weeks prior to the date of maturity at 100%. Wouldn't it be worth more if it was compounding the average S&P over the life of the account?



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Author: peppermintpatty Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3438 of 19483
Subject: Re: tranfer annuity ? Date: 4/6/2000 11:27 PM
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razuli -

You said: "The account is an indexed annunity that grows at 3% until it matures in 2004 At the date of maturity it is credited with 100% of the average of the Weekly S&P 500 during 13 weeks prior to the date of maturity. This sounded good when I bought it but now I know that it would be better if the money was compounding over the life of the seven years."


I would tend to agree with you... 3% over 5 years & then a bonus is not what I'd prefer!

Best wishes, PP




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