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Heres my story. My wife has approx. $30,000 in a variable annunity. We investigated and found due to high fees and lower returns shes not getting the best bang for her retirement buck. I would like to get her money into a ROTH IRA, and use the Fooloish 4 approach to better her returns. Our situation is this I work for the 2nd largest railroad in the country, I have a company sponsered 401k, and will recieve a Railroad Retirement pension. My wife isn't offered any type of retirement savings through her work, but will recieve half of a railroad pension for being married to a railroad worker. Our AGI is below $90,000 a year, and we have at least 30-35 years apiece before retirement.

1.First Question, I've been told that due to my retirement plans through work niether of us are elligable to setup a tax deferred IRA, is that correct?

2. To cash out the Annunity won't be too painful only approx. $800 in penalities. What sould I do to get this money in a retirement account where I can have control over the money and not get mutual funds shoved down my throat as investment options?

3. If I cash out the annunity how much of the money can be invested into a ROTH IRA?

4. The original investment into the annunity was an after tax investment, if we were able to put the money in an ROTH IRA would we have to pay taxes on that money again, or just on the money that has been earned since in the annunity?

I know what we want to do with the money when we get it out of the annunity. But really would appreciate any help on the process involved in getting the money away from the Annunity and into a ROTH IRA with a discount broker.

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