Moving money

Options for moving your money from one annuity to an annuity at another company.

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Akweli Parker: This next question is from Robert in West Kingston, Rhode Island, and he poses the question, “I have an annuity that I purchased seven years ago, but I have no idea if it’s right for me. How can I figure out if this was the right choice to invest my money?” Now, Danielle, I’m sure you have these conversations. What would you tell him?

Danielle Corey: Yes, absolutely. So it really depends on the type of annuity and the terms of his contract with the insurer. Again, are there going to be surrender fees associated? On the income annuity side, when you’re making that decision, it is intended to be a permanent decision—so there’s not a ton of great options for folks if you change your mind after the fact. So you want to make sure you’re really sure when you’re going into that purchase decision.

On the variable annuity side, there are options. There’s something called a 1035 exchange that can be done, that allows you to take your money from one company and move it to another if there’s the opportunity to save on fees or something like that. And most of our cash flow into the Vanguard Variable Annuity is actually 1035 exchanges. Someone either purchased or was sold an annuity that maybe had high fees elsewhere, and because of the tax penalties that could be associated if you withdraw before 59½, they want to keep a variable annuity but decide to move it over to Vanguard to save on the fees overall.

Again, you know, folks can call us if that’s an option that they want to discuss, and the experts that they would talk with are going to be able to give them nonbiased guidance and help them decide what the best option is for them.

Akweli Parker: Interesting. With the 1035 exchange, is there a waiting period associated with that or is that something that people can do pretty much immediately?

Danielle Corey: So, again, it depends on the terms of the contract and how long the surrender period is. So for each individual situation, you would need to assess that.

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All investing is subject to risk, including the possible loss of the money you invest.

This webcast is for educational purposes only and should not be viewed as an investment recommendation. We recommend that you consult a tax or financial advisor about your individual situation.

Product guarantees are subject to the claims-paying ability of the issuing insurance company.

The Vanguard Variable Annuity is a flexible-premium variable annuity issued by Transamerica Premier Life Insurance Company, Cedar Rapids, Iowa (NAIC No. 66281), and in New York State only, by Transamerica Financial Life Insurance Company, Harrison, New York (NAIC No. 70688). Form No. VVAP U 1101 (in Florida, Form No. VVAP U 1101 (FL), in Oregon, Form No. VVAP U 1101 (OR) (R), and in New York, VVA NY 0208(R13)). GLWB Rider Form No. RGMB 43 0811 (in Florida, RGMB 43 0811 (SI)(FL), RGMB 43 0811 (JT)(FL), in Oregon, RGMB 43 0811 (SI)(OR), RGMB 43 0811 (JT)(OR), and in New York, RGMB 43 0811 (SI)(NY) (REV), RGMB 43 0811 (JT)(NY) (REV)). Return of Premium Death Benefit Rider Form No. VVA RP 0811 (in Florida, VVA RP 0811 (FL), in Oregon, VVA RP 0811 (OR), and in New York, VVA RP 0811 (NY) (REV)), without agent representation. Policy and rider form numbers may vary by state and may not be available in all states. The Vanguard Group administers the Vanguard Variable Annuity for the issuer. The Vanguard Group, Transamerica Premier Life Insurance Company, and Transamerica Financial Life Insurance Company do not provide tax advice. Investors are encouraged to consult a tax advisor for information on how annuity taxation applies to their individual situations.

The Vanguard Variable Annuity has an average expense ratio of 0.52%, versus the annuity industry average of 2.26% (Source: Morningstar, Inc., as of December 2016); excludes fees for optional riders. Actual expense ratios for the Vanguard Variable Annuity range from 0.40% to 0.71%, depending on the investment allocation. The expense ratio includes an administrative fee of 0.10% and a mortality and expense risk fee of 0.19%. The expense ratio excludes additional fees that would apply if the Return of Premium death benefit rider or Secure Income (GLWB) rider is elected. In addition, contracts with balances under $25,000 are subject to a $25 annual maintenance fee.

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