AIG annuity to IRA?
About four years ago, our 64 year old Mother was talked into investing over $100,000 in a flexible premium deferred policy. She can’t touch the money for 4 more years.
Could she roll this over to an IRA without penalty?
We keep telling her that her money is protected, but are we correct>
Thanks.
Permalink Submitted by Alan Spross on Sat, 2008-10-04 00:41
If this is a non qualified annuity, it cannot be rolled into an IRA.
A non qualified annuity is only protected by the financial strength and credit of the issuing company. If the company defaults and cannot meet the terms of the contract, the only backup is her state insurance guarantee fund. Some state guarantee funds are more than likely not funded to address large amounts of claims.
Historically, failed insurance companies have been purchased by larger competitors and losses avoided. This time around, we are also seeing government backed loans in the case of AIG.
Permalink Submitted by Al Fry on Sat, 2008-10-04 04:09
And with most annuities, she can take 10-15% out each year without surrender charges.
Permalink Submitted by Dennis D. Duffy on Sat, 2008-10-04 20:53
Be careful though, I have seen a number if AIG annuties that have no alllwoance at all without surrenders.
Permalink Submitted by BruceM on Sun, 2008-10-05 04:14
And not to try to make matters worse…but most state guaranty funds do not cover variable products. You need to check with your state insurance commissioner’s web site to verify. And while you’re at it, you might consider registering a complaint for ‘unsuitability’ with the insurance commissioner. This would probably depend on how much your mother relies on the $100,000 for her retirement and other constraints the VA carries vs your mother’s needs.
BruceM
Permalink Submitted by Al Fry on Sun, 2008-10-05 22:01
I am not sure he said it was variable. If it is the separate accounts may not be with AIG.