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Surrender Charge Variable Annuity Fees

Usually, if you withdraw money from a variable annuity in a specified timeline after buying a variable annuity, the insurance company usually charges a surrender charge that will be a percentage of the your capital to the account or account value. This surrender charge is not the same the addition to the 10% penalty tax that the IRS may charge for taking untaxed money from a variable annuity prior to being 59 ½.

The amount of this surrender charge can vary, depending upon the time you have owned the variable annuity. The surrender charge will drop over the course of the surrender period which can run for five to fifteen years, generally. In some cases, insurance companies calculate surrender charges in a different way, with a new contribution starting a new surrender period for that variable annuity contribution, when a fixed percentage surrender charge is charged for that amount. Some variable annuity fee contracts may let you take out a certain percentage of the account value every year without a surrender charge. This is called a free corridor rider. As with all variable annuity fees, it is important to comparison shop for variable annuities about when you can access your account in a variable annuity and exactly what surrender charges will apply. This allows you to assess the surrender charge variable annuity fees.

Mortality and Expense Risk Charge Variable Annuity Fees

This variable annuity fee expense is equal to a certain percentage of your variable account value, typically around 1.25% per year. The current average Mortality and Expense charge is about 1.2%. This charge allows the insurance company to guarantee the variable annuity purchase rates.

Account Maintenance Variable Annuity Fees

This will be an variable annuity annual fee of about $25-$35. This help defray the expense of the variable annuity company managing the account. The account maintenance fee is usually waived for account balances above a certain level. The current average Administrative Fee is about 0.18%

Other Fund Fees

With most variable annuity, you will also pay the fees and expenses charged by the mutual funds that are the your investment options within the Variable Account of the variable annuity. These mutual fund fees go towards paying the mutual fund company that is investing the fund’s investments. Current average mutual fund expenseis about 0.75%.

Fees for Optional Features

Fees for different optional options differ according to the variable annuity insurance company issuing the variable annuity. These are some other selected average fees for popular variable annuity fee add-ons

• For the Guaranteed Minimum Income Benefit, an average fee of 0.5%.
• For the Guaranteed Minimum Accumulation Benefit, an average fee of 0.4%.
• For the Guaranteed Minimum Withdrawal Benefit, an average fee of 0.45%.

Variable annuities can be a great retirement investment vehicle. However, variable annuities may not be right for everyone. It is important to make sure to review your options carefully, because variable annuities are long-term investments and insurance companies tend to charge hefty penalties for early withdrawals.

First, use a service to have them shop around to find you the best rates on variable annuities. I recommend this website, they will give free instant variable annuity quotes. Examine these variable annuity quotes and then sit down with your financial advisor or accountant to come up with a retirement plan that is best for you.

Good luck!

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