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What do I do with my annuity? At 30 years old I could use it to pay down my house or switch it to a 401k I control.

I have no debt outside of home and two cars, all loans under 4% interest. I have no control over the annuity. It's from when I was in a union and their board of trustee's determines the gain/loss interest rate each year.

Oct 06, 2014 by matt from King of Prussia, PA in  |  Flag
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Layton Jacob Cox Level 11

If the mortgage payment isn't killing you, I would roll it over to a 401(k).

You seem to be in a pretty good spot financially speaking. You can easily make more than 4% in a 401k plan, over the long term.

Unless you are just getting killed by the mortgage and you hate the thing with a red hot passion, I would roll it over to a 401k and make some money until retirement.

Comment   |  Flag   |  Oct 06, 2014 from Tucson, AZ

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To ad to the answer above, if you're only 30 years od you will pay some hefty fees and taxes to take it out of a retirement plan.

Comment   |  Flag   |  Oct 06, 2014 from Canton, GA

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You are vague on how the money is coming to you from the annuity, as William points out, annuity lump sum is not available to you, except for rollover to 401k or IRA, until you are 59.5. With all the taxes and penalties it would be an easy decision - roll it over to the 401k.

Comment   |  Flag   |  Oct 06, 2014 from Bridgewater, NJ

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Tunc Tanin Level 10

A rollover may or may not be in your best interest. With some of these union plans, you may not have the choice of rollover before age 59.5 or sometimes age 65. Even then the union plan may have better options then whats available in the open market survivorship and disability payouts. You should talk to Registered Investment Advisor who is also experienced in variable annuities. Usually fee only advisors don't have variable annuity experience. They will blindly recommend you to do a rollover.

Most union contracts want you to keep this money only for retirement so you may not have the option of rolling over to 401k. If the rollover option is available to you, you should also consider rolling it over to IRA and since you are only 30 years old, a Roth Ira may also make sense. I recently advised a client to keep her money in a union pension inside of a variable annuity as it had a guarenteed minimum interest rate of 5% that never went lower than that lifetime. There was no way for me to roll over that and beat that on a guarenteed basis in the market.

Comment   |  Flag   |  Oct 06, 2014 from Somerville, MA

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John Essigman Level 17

Looks like you have been carefully managing your finances… kudos!

If your mortgage company allows it, pay the mortgage twice per month rather than once per month. You don’t pay more you just make a payment more often. Doing this will cut roughly 7 years off of a 30 year mortgage.

Not clear but it sounds as if your annuity is part of a pension plan or defined benefit plan since it is being managed by a union. Although you will get better control by moving your pension into an IRA or 401(k), some pensions cannot be moved and/ or have special rules. Call your benefits administrator and ask for a copy of your pension summary plan document. This document will detail what is or is not allowed regarding your plan or account.

Comment   |  Flag   |  Oct 06, 2014 from Cleveland, GA

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We have worked with a union for many years. It sounds to me like you are wondering if you can get a better return outside of your annuity. Of course, the answer is not that simple. "It depends." One could look at your annuity's historical interest payments and compare to various stock/bond investment strategies. As others have mentioned, you need to check with your benefits department to see what your options/restrictions are for moving the account.

Comment   |  Flag   |  Oct 16, 2014 from Mendham Township, NJ

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