If you are currently in an annuity and would like to take advantage of the rates that are available now that the Federal Reserve has increased interest rates or if you would like get exposure to the market you have two options.
Your first is liquidate your current annuity holding and purchase bonds or equities outright. This would generate a tax bill for all the gains you have experienced since you started the annuity. For some people this could mean a 4 to 5 figure tax bill if they have held the annuity for some time.
Your second option is to use a 1035 exchange to move the money from one annuity product to another. As rates increase from the Federal Reserve, so will fixed annuities which can give you similar returns to a government bond. The main difference is the annuity is backed by the insurance company and a government bond will be backed by the U.S. government. You will also be able to use different indexed annuity options to gain market exposure without leaving the annuity bubble. While the 1035 does limit your investment options it may be the best way to continue to defer the taxes on your gains until you are ready to systematically pull income out of your account. It should be noted that when changing your old annuity product you may lose riders or other benefits that are no longer offered. This decision should be reviewed carefully before products are changed.
If you think that a 1035 exchange may be best for your situation fill out your information below so we can start the conversation.