Changing and moving annuity investments
I came across a prospect who has 2 IRA accts and 1 non-qualified acct invested in annuities. The investments are 10 year old and have already passed surrender charge period.
Prospect's agent seems no longer interested in this acct or has left the business, I'm not sure. According to prospect, communication between them has dwindled to zero for the past couple years. Anyway, this prospect want me to help them with these annuity accounts. I'm trying to find out what options they have and what would be best for them.
The performance of their annuity seem to have been very poor. They invested 200K in 1997, all in equity funds, today the accts are worth only 210K. I think we have to at least change the funds.
Can I also move the accts to say Vanguard or Fidelity, without making it an taxable event?
The qualified money, yes. Move it to wherever you want inside the IRA. The NQ money, no. 1035 exchange is your only option for not creating a tax bill.
I would also pay attention to the death benefit. It's possible they have a substantially larger death benefit than account value. That's pretty common with annuities issued in the late 90's. If they do, you might be doing their heirs a disservice by liquidating or exchanging the policies. There are some alternatives, but let us know if there is a death bene or not before we go there.
It's not uncommon for agents to ignore old annuity contracts. I'd say 9 out of 10 times if you find someone with an old annuity they haven't heard from their agent in a year or more. Great opportunity to talk with them about new annuity features their old guy missed.