Q: For the past 17 years, I've had a good retirement, but in this economic chaos, we need what little additional income I get from any annuity I have. As you know, FDIC does not cover annuities, and I am in a real quandary. I've been thinking of withdrawing from the annuity and putting the money somewhere under the FDIC umbrella. But if I do that, I will incur an early-withdrawal penalty of several thousand dollars AND lose the monthly income from that annuity. And yet, if I leave the annuity untouched as it is, the insurance company might go belly up, and I could lose the whole annuity. I will be 80 next year, so I am not about to re-enter the workplace!
Do you think I ought to leave my annuity untouched? The company seems to have received good ratings in the past.
A: Although FDIC does not cover annuities, state-run programs typically cover them. First, contact the insurance company to inquire about its solvency. Then contact state-insurance regulators -- both in your state and in the state where the insurer is based -- to get their analyses of the insurer's financial condition, and to see what protections they offer if the company were to become unable to pay the money you've been promised. That information could give you the reassurance you need to keep your money in the annuity.
Q: I recently took out my pension in one lump sum and would like to reinvest it. After taxes, it only came to $61,000. I'm 48 years old and recently left my job (not the employer of my pension), due to stress. I am planning to find a better career and would like to keep about $10,000 in my high-performance money-market checking account for emergencies. It was suggested that I put the rest of the monies in a Roth IRA. Can I put the whole amount in the Roth IRA at once, or can you suggest a better option for me? I know it was a mistake taking out my pension, but I had no other choice. Your input would be greatly appreciated.