BMS wrote:

Snipped A LOT

- quote -

If you are comfortable with CDs and you are using long term CDs (5+
years) you should get an education on Equity Indexed Annuities. They
pay minimums close to what a CD will pay BUT allow you to earn more by
linking the upside to an index.

Gene E. Utterback, EA, RFC

Tax rates are at historiclly low levels and insurance companies are
earning historiclly high profits. Annuities are typically much more
expensive than other types of investments. Given the low taxes now it
is often best to just pay the taxes and avoid the expenses. Unless
there is a specific non-tax reason for the annuity, you might consider
other non-annuity options.


Gary Brolis
http://ww.MechanicsofMoney.com
http://www.MechanicsofMoney.com/blog.php

<nirak2k22000[at]yahoo.com> wrote in message
news:1142882416.563298.154240[at]z34g2000cwc.googlegroups.com...
- quote -

You should have on your statement a net return for the investment, thatwould
be after any fees are taken out. If you have a gross amount, then you need
to take out the fee number.

- quote -

You may do better to switch to a fixed annuity, instead of just having
everything in a VA in the fixed bucket.

- quote -

There is a lot to be said about investing in what you know and if that gives
the return that you need so you don't run out of cash then it is a good
plan.

Thanks all for your answers.

- quote -

Why do these charges never show up on the statement though? Is that
standard practice with annuities?

- quote -

The rate for the fixed account is 3% (set ~ 3 years ago), which isn't
great, but I'm a conservative investor. I tend to invest in things,
then leave them alone. At the time I got the annuity, I was working
and paying taxes. But since that time, I "retired" early, which is to
say I stopped working, but due to my age, I am NOT drawing retirement.
I'm currently 51 and living off my investments (CDs, etc.). And yes, I
can do this since I saved up a lot, and live a modest lifestyle. But
I'm beginning to wonder about the wisdom of an annuity for
tax-sheltering purposes since I'm not paying any taxes. And I'm single
and don't have "heirs", so all this stuff about a death benefit (which
supposedly is included in an annuity?) doesn't apply to me. But I have
a bit of money in this annuity and if it weren't sheltered, I *would*
be paying taxes, so maybe it's the right thing after all. I no longer
have the option of investing funds in my IRAs, since I'm not working.

- quote -

Hmmm...I'll have to look into that. Though the only products I'm
really interested in are CDs, since I understand them. And they
provide a good enough rate for my purposes.

But I understand there's an IRS penalty for
- quote -

To answer your GENERAL question here, you are "STUCK"
with AN annuity, not neccessarily this one. If it became
neccessary
for you to change(1035 EXCHANGE) you could possibly
move it to another annuity without the IRS penalty.

..
- quote -


There is no question as to the fact that you OWN a variable annuity.
YOU have selected at one time to INVEST the Cash Value Account
in a FIXED Interest sub-account, but it IS still a variable annuity.

- quote -

The contract is a Deferred Annuity, in that any earnings INSIDE of
the contract are not taxed untill withdrawn. ALL annuities (other
than
an IMMEDIATE ANNUITY, one that pays out and immdiate income)
are DEFFERED.

- quote -

- quote -

money in each one.

- quote -

immediate annuity are those lottery prizes that are paid out over 25 years.
- quote -

and expense fee of .85%, very low expense fee.

Now to figure out if you are in the right investment is another story. What
is rate for the fixed account? What are your other investment choices.

You are not necessarily stuck with this, if you find this is not the right
investment, it is possible to do a 1035 exchange, a swap from this annuity
into another product.

It is never a good thing to be in an investment you don't understand. you
should be able to go to Schwab or an independent financial planner and get
them to explain it to you so you can make an informed decision.

Good luck


======================================= MODERATOR'S COMMENT:
Thanks for trimming the OP's post.

Okay, this is my first post, and I apologize for it's length. But I've
been lurking at this group, and I see there are plenty of knowledgable
people here. So maybe I can get some answers to my very basic
questions.

Once I've understood the basics, maybe I can figure out whether I'm in
the right investment.

Back in 1998, when my Dad was managing my money, he put me into a
variable annuity (from Schwab). That's because I already had an IRA
and Roth IRA and he was looking for another tax-deferred investment.
I've never understood annuities, and am trying to determine if keeping
mine makes sense for me. But I understand there's an IRS penalty for
withdrawals prior to age 59 1/2, so I guess I'm stuck with it for
awhile.

But I have some basic questions that maybe some of you can help me
answer. For reference, I've included info from my statements and
contract below. Those of you familiar with annuities might want to
jump directly to the summary info before reading my extremely long and
boring questions.

QUESTIONS

1. TYPE OF ANNUITY. Do I have a variable annuity or a fixed annuity?
When I first opened the annuity in 1998, it was a variable annuity.
Later, I decided to get a fixed rate, and my current statements say I
have a "non-qualified fixed and variable annuity". It seems I have a
fixed "subaccount" within an overall variable annuity. So far, so
good. Yet the first time I opted for a fixed rate, the transaction
statement called it a "flexible premium/FIXED deferred annuity",
suggesting it was a fixed annuity. They didn't use the word "variable"
at all. So, I'm confused. Do I have a variable annuity, a fixed
annuity, or a fixed subaccount within a variable annuity? I'm assuming
the latter, but would like to have it clarified.

2. DEFERRED OR NOT? Is my annuity a deferred annuity? I thought it
was...I mean, the whole purpose was to get a tax-deferred investment.
And the "flexible premium/fixed Deferred Annuity" language above
explicitly uses the word "deferred", yet all the other paperwork,
including all my current statements, says it's "non-qualified". And I
thought non-qualified meant non-deferred. What am I missing here?

3. FEES AND EXPENSES. I was told my annual contract fee was waived
because of the high balance, but I can't tell if I'm being levied any
other fees. My Contract Data Page (see below) indicates I should have
various "Risk Charges", yet I don't see any of them on my statement.
Are they taking out the money and just not telling me? I'm very
confused about this since I keep hearing horror stories about all the
hidden expenses and fees of annuities.

Thanks to any and all clarification you can give.

Now, here's the pertinent facts from my data sheets.


FROM MY CURRENT STATEMENT:

Schwab Select Annuity
Contract Issue Date: 1998
Type of Account: Non-Qualified Fixed and Variable Annuity

Sub-Account:
Schwab Money Market Portfolio -
MVA Guaranteed Period - 3 Years

Annual Contract Charges - $0.00


FROM MY CONTRACT DATA PAGE:

Charges: Charges at the time we issued this Contract are shown below.

Risk Charge--
Mortality: .68% maximum
Expense: .17% maximum
Total: .85% maximum


FROM 2002 TRANSACTION CONFIRMATION STATEMENT (the first time I went for
a fixed rate):

The Schwab Fixed Annuity (J424, a Flexible Premium/Fixed Deferred
Annuity)
Transfer out: Schwab Money Market
Transfer In: MVA-Guaranteed Period - 1 Year