I inherited a variable annuity a while back and at the time I didn't want to deal with it so I was able to leave it with the company (Hartford) for up to 5 years. I didn't want to cash it in b/c I don't want to take the tax hit as it's worth 4x my cost basis (which we all know isn't stepped up on these things). My plan was to wait the 5 years, or see if a year came around where my income was substantially low enough to get a lower tax hit. As of 2014, it will be paid out either way.
Anyway, I was looking at the fees today, they are pretty impressive. If I read it right I have:
Annual fee of $30
fund expenses of around 1% for each fund
mortallity and expense risk charge (?) of 1.4%
optional rider fees (not sure about these)
After looking at this, part of me says to suck it up, cash it in, pay the taxes and put the money in vanguard with everything else.
Another part of me says wait till you HAVE to take the tax hit, and don't worry about the expenses (it's not a major % of my overall portfolio).
From what I understand there is virtually no way to avoid or substantially lower the tax hit on this, correct?
Wutchya'll think?
Anyway, I was looking at the fees today, they are pretty impressive. If I read it right I have:
Annual fee of $30
fund expenses of around 1% for each fund
mortallity and expense risk charge (?) of 1.4%
optional rider fees (not sure about these)
After looking at this, part of me says to suck it up, cash it in, pay the taxes and put the money in vanguard with everything else.
Another part of me says wait till you HAVE to take the tax hit, and don't worry about the expenses (it's not a major % of my overall portfolio).
From what I understand there is virtually no way to avoid or substantially lower the tax hit on this, correct?
Wutchya'll think?
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