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First, to get her paws on the 401K, she would have to leave her job. If she does that, the 401K funds can be rolled in to a self directed IRA without taxes and penalties.

Since both IRA's and 401k's are tax deferred investment vehicals, it makes no sense to invest those funds into tax deferred investment such as an anuity. There is no upside and only downside.

If she is thinking of rolling her 401K to an IRA, and then cashing it out for 50 cents on the dollar (after taxes and penalties), and then investing the remaining money into an expensive anuity, that makes even less sense. She will be much poorer and the insurance company much richer.

There are circumstances where investing in an annuity makes financial sense. Funding it with a 401k or IRA usually does not.
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