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Author: ordog5 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19026  
Subject: Variable Annuity Date: 12/21/1999 4:54 PM
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Initial investment 52,000, 4 mutuals funds have increased value to 82,000. No withdrawal penalty. I'm 76 and don't need income presently. Should I roll it over to a Vangaurd or Fidelity, locking in the increase? ordog 5
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1039 of 19026
Subject: Re: Variable Annuity Date: 12/21/1999 6:34 PM
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Greetings, Ordog5, and welcome. You asked:

<<Initial investment 52,000, 4 mutuals funds have increased value to 82,000. No withdrawal penalty. I'm 76 and don't need income presently. Should I roll it over to a Vangaurd or Fidelity, locking in the increase? >>

I'm assuming this is a regular annuity and not one inside of an IRA. If you surrender that annuity and move the funds to a mutual fund, then the $30K in earnings within that annuity will be taxable to you at regular rates. The only way you may avoid that is to move to another annuity via what's known as a 1035 exchange.

If you pay the taxes now and move the money to a regular investment, then your heirs will take that investment at market value at the time of death. They could sell immediately and owe no taxes on the proceeds. OTOH, if you keep the money in an annuity (either the one you hold now or one you establish via a 1035 exchange) and if that hasn't begun payments to you at the time of your death, then your heirs will get the proceeds, but they will have to pay ordinary income tax on any earnings (i.e., the $30K).

It's impossible for us to say what's "best" for you in your situation. That's something you have to look at and decide for yourself. No one here knows your entire financial situation or your needs to even suggest an appropriate course of action. All we can do is outline some of the outcomes, and then you have to do the analysis to see what may be the best way for you to go.

Regards..Pixy

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