401k Recovery Advice

The Hidden Costs of Annuities

Investopedia |

In Brief...

At one time, annuities may have looked like an ideal retirement vehicle: "The fine print" on returns. In the fine print, "fixed" usually means the returns will be re-evaluated in 1-5 years due to market variances. Penalties - If you are under 59.5 and need to pull your contributions out, the IRS will get 10% and the contract writer will ask for a "surrender charge" between 5 and 10%. Tax on Beneficiaries - If you leave your mutual fund to your kids, the IRS allows them to take advantage of a step-up valuation, or the market price of the securities at time of transfer.

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