These folks don’t know about the annual penalty-free withdrawal provision on annuities.

July 1, 2025 by Sheryl J. Moore

MSN doesn’t seem to know enough about annuities, to be writing about them. View Over 40? Fix These Annuity Misunderstandings Before Retirement
via MSN.

“Insurance agents may earn 1% to 10% in commissions—potentially up to $20,000 on a $200,000 annuity.”

– Nope. There are no annuities that pay the agent 10% commission.

“One of the most important things about an annuity is its long-term commitment to tie up existing funds. If you are between 40 and 50, you will be paying a lump sum into an annuity now, which removes your existing cash pool but guarantees income in 15 to 25 years.”

– Actually, annuities can guarantee income for a lifetime.

“Unlike a 401(k) account or an IRA with government-placed limits on how much you can deposit, there is no such consideration with an annuity, as you can place as much money into one as you can reasonably afford.”

– Well, not really, but I’ll give them the benefit of the doubt.

“Going with a fixed-rate annuity means knowing exactly how much money you will receive as a payment so you can plan accordingly. However, most insurance companies only guarantee the rate for up to 10 years. Afterward, they can change the rate, and you can’t get out of the annuity without a surrender charge.”

– Um, no. Very often, you can cash surrender a MYGA, at the end of the guarantee period. And what about the annual penalty-free withdrawal provision?

“Unlike stocks you can cash out of quickly, pulling money out of an annuity requires surrender fees.”

– Why are we comparing annuities to stocks? And what about the [10%] penalty-free withdrawals that the client has the option to take?

“…the percentage these accounts grow might not keep up with inflation, leaving you with less buying power than a 401(k) or IRA.”

– Again- annuities are about risk mitigation; not greater alpha.

“It’s important to know that you’ll have to deal with surrender charges when you sign up for an annuity if you need to withdraw money in the first 7 or 10 years.”

– These folks don’t know about the annual penalty-free withdrawal provision on annuities. ARGH! -sjm