Annuity Upgrade Time?

Today’s annuities remind me of the old car commercial: ”This is not your father’s Oldsmobile.”

Many of today’s annuities have features that were not available years ago. If you have an existing annuity, it may be time to look at the options provided by today’s newer annuities to see if they offer features that better serve your retirement income needs.

There are possible advantages and disadvantages that have to be considered on a case-by-case basis. Some things you may want to consider when deciding to upgrade your annuity include:

Current Surrender Charges
In most cases, if you have a surrender charge on your existing annuity it may make sense not to move it. The good news is most annuity policies we see the surrender period has expired.

New Contract Guarantees:
If your existing annuity guarantees a higher return than what is currently available, it also may not make sense to replace your existing annuity.

If, however, better guarantees are available with a new annuity and there are newer features that better meet your retirement goals, it may be worth exploring.

For example, a fixed index with an annuity rider may offer lifetime income guarantees that provide more money during retirement.

Tax Considerations
In order to avoid creating a taxable event, the IRS requires the exchange of one annuity for another to be done as a 1035 exchange. The only requirement is, the new annuity must be on the same insured.

When you roll an “old” annuity into a new one within a 1035 exchange, you maintain the cost basis you had in the original annuity. A 1035 exchange can be done to consolidate more than one annuity into a new annuity contract.

Whether you should upgrade your existing annuity or keep the one that you have is something that can only be determined by reviewing your current contract. If you have old annuities and want to find out if today’s new features better meet your retirement needs, call or email us today to get a free annuity review.

* Annuities are designed for long term financial planning and are not designed for short term investment strategies. Guarantee periods or annuity payments may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuing insurance company.