Fidelity Annuity

[filmguyinla]

Hi all, I'm aware Annuities are generally perceived as a 'bad' word but wondering about Fidelity's Personal Retirement Annuity. I read awhile back that this one is not bad like so many others. I've been in it for several years but now can get out due to age now of 59 1/2. Should I close it out and redirect monies elsewhere from or continue to let it grow. Not expecting to retire for another few years.

 

[chassis]

If it were me I would exit the agreement according to its rules.

What were your reasons at the time for entering into the annuity agreement? Do those reasons still stand?

 

[filmguyinla]

Thanks for reply....My reason to enter the annuity...

was that I was recommended by my Fidelity advisor that this would be a good idea since I maxed out my SEP and had extra funds to invest somewhere. Was this bad advice and a way for him to make some bonus or similar. I am self employed and no pension.

 

[jazz4cash]

If I could I’d prohibit using the word “annuity” without an adjective. Even some of the “bad” types of annuities that were purchased many years ago look pretty decent compared to current rates.

Devil is in the details. No way to know if you should stay or go without details. One thing most annuities share is severe penalties for leaving during surrender period.

 

[friar1610]

was that I was recommended by my Fidelity advisor that this would be a good idea since I maxed out my SEP and had extra funds to invest somewhere. Was this bad advice and a way for him to make some bonus or similar. I am self employed and no pension.

I think it was bad advice. I fell victim to the same advice from a Fidelity guy many years ago. I still own the annuity. It has grown quite nicely and I have since 1035’d it to another annuity provider that meets my current needs better. But, knowing what I know now, I wish I had rejected the advice and had just kept the money in taxable accounts. Alternatively, I wish I’d surrendered it before it grew so much that it became a tax bomb. I do have a plan B for using it now, although it isn’t at all what I thought about when I bought it. But, to some degree, I’m just putting lipstick on a pig.

 

[pb4uski]

Hi all, I'm aware Annuities are generally perceived as a 'bad' word but wondering about Fidelity's Personal Retirement Annuity. I read awhile back that this one is not bad like so many others. I've been in it for several years but now can get out due to age now of 59 1/2. Should I close it out and redirect monies elsewhere from or continue to let it grow. Not expecting to retire for another few years.

To be fair though.... how much did you put in and when and how much will you get when you close it out?

It will likely be a taxable event to you so it also depends on yor tax situation. If your 2021 earnings are higher than normal or higher than you expect 2022 to be you may want to wait.

YMMV.

 

[Ncc1701]

I am a former Fidelity branch advisor. We were all pushed HARD to sell that stuff (FPRA and PAS). It's an easy 25bps extra in revenue for Fido.

The good thing is there is no surrender charge. The bad is any gain you realize will be taxed as Ordinary income (not CG).

 

[pb4uski]

^^^ Not only that but it is gain first and principal second so even partial surrenders often get taxed at ordinary rates.

I don't think the 25bps is a problem but rather all the fees and expense charges that come before it.