SMART MONEY: Avoid paying a penalty to get out of an annuity
DEAR BRUCE: Several years ago, our banker got us into an annuity for approximately $25,000. We are both in our 70s. We are taking the minimal distributions.
I have been reading so many negative reports about annuities. Is there any way for us to get out without paying a large penalty? — L.C., Citrus Springs, Fla.
DEAR L.C.: I can understand how many negative things you have read about annuities, and many of these I agree with. On the other side of that, there are some annuity contracts that are perfectly acceptable investments for specific individuals under specific situations.
The major thing you should be concerned about when investing in an annuity is getting out without paying a large penalty. If it’s been several years since you invested, chances are that the redemption penalties are very small or perhaps have gone away all together.
The first thing to do is write to the company that has underwritten the annuity and ask what penalties, if any, would apply. If you wish to make a partial or complete withdrawal and you are getting to the end of the period when there will be penalties, you might wish to stay until they expire.
You may wish to pay someone for this information.
Do not go to another salesperson, who may try to persuade you to drop the annuity and buy something from him or her.
A fee-based consultant would not present a problem because he will not be in the market to sell you anything other than information.
DEAR BRUCE: I had a credit card that on many occasions, no matter how early I mailed the payment, the company claimed it was late. This account appears on my credit report as 90 days past due, paid in full, account closed.
I have since received letters about a class-action lawsuit against this company. I guess I wasn’t the only one with this problem.
What can I do about getting this off of my credit report? The reason it was 90 days late is a long story. It is the only blemish I have on my report. — J.P., Anaconda, Mont.
DEAR J.P.: If you have only this one blemish on your credit report, I wouldn’t get upset about it. Since the account is closed, there is little you can do.
You say it shows 90 days past due. I am assuming you mean that there were past due payments, but since the account is now paid in full, it’s not really an issue. Over a period of time, it will eventually fall away. In the meantime, I don’t think you will have any difficulty getting credit.
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