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I've encouraged her to pull this money from the annuity and reinvest it in the Vanguard 500. The problem is, that this would now be a taxable account.

Glad you asked. We've just solved this same problem, at least what worked for our situation. We decided not to pull ours out of the variable annuity because of a heavy tax penalty. We learned that it could be rolled over into another annuity with no tax impact - and after some research discovered that Vanguard has a low cost annuity and the fund choices include the Vanguard 500 index. You can phone and get the details from their annuity department at 1-800-522-5555 or perhaps 1-800-462-2391. (I found both numbers on my annuity folder) We chose to put most in their Prime Money Market , 2% in 500 Index, now we will dollar cost average the rest into the 500 index fund.

Charlotte
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