No. of Recommendations: 0
Greetings, HairBear2, and welcome. You wrote:

<<Unfortunately, before I discoverd Fooldom, I went to a financial advisor (I know) and started a retirement annuity account, along with other products I have long since canceled. Now, I do not have much invested in this account, only several thousand dollars, and it has returned about 11-12% "tax deferred"every year since its inception in1995. I stopped my small monthly contributions a few years ago but am wondering what to do now. Would it be more Foolish to "cash-in" the account and pay the penalty of withdrawal of about $300 plus the capital gains tax and invest it on my own for the longterm? Just leave it alone? Or, restart monthly contributions?>>

While I find Rayvt's response most appropriate, prior to cashing out during the surrender period you might want to see if you want to take that penalty. You say it's now about $300 on several thousand invested. That has to be close to 10%. How fast can you regain that 10% elsewhere versus just letting the money ride until the surrender penalty expires? Also, you talk about paying "capital gains tax" on the earnings. Be aware that any gain in an annuity is always taxed at ordinary income tax rates. Additionally, if you take them now and if you're under the age of 59 1/2, you must also pay a 10% early withdrawal penalty.

Bottom line: Tote up the surrender penalty, the taxes, and the early withdrawal penalty. Subtract that amount from the annuity's value to get the net proceeds available for investment. Compare investing that amount in an alternative against letting the money ride in the annuity over a fixed period. Compare the results on an after-tax basis, and that should tell you what to do.

Regards..Pixy
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.