Is a Variable Annuity Suitable For a Roth IRA?

Q. My wife and I both bought into a #### Variable annuity last year in the form of a Roth IRA. Is this a bad investment? We are both 38 years old. If I need to bail out of this can I do that easily without being penalized? Thank you.

A. I don't see where a variable annuity provides any significant benefit for a Roth IRA...other than to the agent who sold it to you. You would have a much larger investment universe to choose from outside the variable annuity, whereas inside you only have the options they allow you.

Many variable annuities have surrender penalties that last for 7 years. If yours does, then it doesn't make sense to get out and pay the penalty. Instead, put any future contributions into more of a brokerage-type Roth account, for instance at Fidelity, T. Rowe Price, Vanguard, etc.

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