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Greetings, GaryDZ, and welcome. You wrote:

<<My father is 65, he retired from General Motors after 25 years. He has a very healthy pention, does not spend what he gets each month.

He has also manged to save $100k in retirement. He has it tied up for 8 years, 5 years left. It earned him less than 5% interest. He will have to pay a 5% penalty to with draw it early.

I hope to help him set up an IRA account and transfer all his funds into it. If I am correct that can be done without TAXES. Pay the 5% "FINE" and put his money to work.

Any advice? >>

Just make sure the annuity you and your dad are considering for surrender is actually inside of an IRA. If it's not, then on surrender your father will be subject to income taxes on anything he receives that is more than his original cost plus the applicable surrender fee. Any net proceeds he receives will not be transferrable to an IRA. Instead, he may only use the remainder in a taxable investment account. And if that's the case, you may want to consider arranging a swap via a Section 1035 exchange to a lower cost, better performing annuity with some firm like Vanguard, T Rowe, or TIAA-CREF (in some states). That, at least, avoids any income tax issue.

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