Choosing an annuity isn’t easy. You’ll have to weigh up the benefits and costs of fixed and variable rate annuities, and qualified and non-qualified annuities. You’ll then have to choose a contract that you hope will deliver the highest returns.
Of course, you might get it wrong. You could choose a variable rate annuity from a reputable insurance company that you expect will grow at a rate of 5 percent a year. In fact, during the years following your purchase you see its value drop by 3 percent a year. The performance of funds can change. Past performance isn’t a guarantee of future success.
But annuities and other retirement funds are meant to be long-term. There are penalties for early withdrawals. Does that mean that having chosen a badly-performing fund you’re stuck with it for the rest of your life?
The answer, fortunately, is no. It is possible to move funds from one account to another using a Section 1035 Exchange. This is a special provision in the tax code. It allows you to withdraw funds from one retirement account and place them in another retirement account without triggering a tax event or a withdrawal penalty.
- The Four Stages of Retirement
- When Can You Retire?
- How Much Will You Need to Save Before You Can Retire?
- How to Create a Retirement Savings Habit
- The Benefits and Costs of a Pension
- Retiring with a 401(k)
- The Benefits of a 401(k) Plan
- The Costs of a 401(k) Plan
- Vesting a 401(k) Plan
- 4 Types of 401(k)
- Rolling Over Your 401k
- Leave Your Old 401(k) with Your Old Employer
- How to Rollover Your 401(k)
- Individual Retirement Accounts—IRAs
- How an IRA Works
- Working Your IRA With Your 401(k)
- 3 Types of IRAs
- SEP IRA Limits
- The Benefits of an Annuity
- Deferred Annuities
- Immediate Payment Annuities
- Fixed Index Annuities and Variable Rate Annuities
- Qualified and Non-Qualified Annuities
- Changing Your Annuity—The Section 1035 Exchange
- The Limits of a 1035 Exchange
- How to Plan for Your Retirement
- How to Start Planning Your Retirement