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razuli - you said:

"Does anyone have information on how to move the funds (i.e. annuity) to something that compounds at a higher rate, without of course having a tax liability ?"

Here are a couple of suggestions for you to consider:

a) Move to a New Insurance Company:

It sounds as if you may own a non-qualified annuity (e.g. not owned within an IRA). If so, you can typically do a 1035 tax-free exchange and exchange your existing annuity for a new one at a different insurance company. One important thing to find out is whether there are "early surrender or withdrawal charges" on your existing policy. These can often last up to 5 to 7 years from the date you purchased the annuity, but the penalty rate typically declines with each passing year. I suggest you check your policy or speak to the person who sold you the annuity to find this out.

b) Stay with the Existing Insurance company:

If your existing annuity is a variable annuity, you should be able to switch to another sub-account that has different investment objectives. You will need to check whether these other sub-accounts better meet your goals. This should be a tax-free exchange as it is within the same annuity.

If your existing insurance company has another different annuity whose returns are closer to what you are looking for, you may want to consider a tax-free 1035 exchange into this new annuity.

PLEASE NOTE THAT IF YOU DO A 1035 EXCHANGE INTO A NEW ANNUITY, YOU WILL TYPICALLY GET A NEW SET OF "early surrender or withdrawal charges". You should consider when you will need to withdraw the money in your annuity, before taking on a new set of surrender charges. There are some annuities out there with no "early surrender or withdrawal charges", but you may have to do some research to find them.

Hope this helps!
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