I would highly discourage you from using an annuity product. As mentioned in the previous post, your funds are already in a tax-deffered vehicle. Annuities also have additional fees. The most common fee is an M&E (Mortality and Expense) charge. The M&E can run anywhere from 1.2% to 1.7% of total assets. And although it may not sound like much, the compounded effect of the extra fees can be significant over an extended period of time.
Annuities are also sold with differing surrender periods. A shares have lengthly surrender periods – usually about 7 years. L shares usually have 4 year surrender periods and C shares have a 1 year surrender period. Each share class has differing M&E charges. The “advisor” gets paid the highest upfront commission on the A shares. Usually about 5%.
You also should be weary of “Index” annuities. Allianz offers these annuities and they are BAD. Index annuities claim they track an index but in reality the formula used to calculate the return on investment differs greatly from the actual performance of the index, even before fees. The surrender periods are usually 10 years. The annuity pusher usually gets an upfront pop that can be as high as 8%. Index annuities are not registered products and therefore any person that can fog up a mirror and pass an insurance exam (anybody) can sell these products.
My advice is to stay away from annuities. Talk to a Certified Financial Planner and explore different options.
