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Sorry, but you're mistaken about what an annuitant's heirs will receive upon his/her death!

The fixed annuity refers to the investment product (a CD-like return, guaranteed by the insurance company, vs. a variable annuity which offers multiple investment subaccounts). You may be thinking of an "Immediate Annuity" vs. a "Deferred Annuity". The immediate annuity appears to be a poor choice because you might expect that if the annuitant dies soon after the purchase the balance of the funds is lost! Well, that should not happen because mant/most programs provide for beneficiaries to receive the balance of scheduled payments for a minimum amount of time...

While I'm not a big fan of immediate annuities, they're not as bad as you may think! And variable annuities can provide some very competitive returns! They don't all perform poorly and/or get chewed up by fees...

As for the original question - the owner of an IRA can make withdrawals prior to age 59 1/2 without penalty if he/she take substantially equal payments for life expectancy. I suggest you see the IRS web page and/or consult a tax advisor for specific steps to follow!

Regards, PP
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