Inside my IRA I have a three-year $100,000 U.S. treasury bills that just matured. My banker recommends I purchase a variable annuity. The insurance company is Allianz, and it was sued by over 250,000 people from 2006-2007 according to my research. – John


Maybe your banker should stick to banking because it’s as if he’s taking you from 0 to 60 in two seconds. A treasury bill and a variable annuity could not be more opposite in terms of risk and fees. One of the advantages of an annuity is that it provides tax-deferred growth. However, since your monies are inside of an IRA, you already have tax-deferred growth. Therefore, an annuity would not provide any additional benefit in that regard. So while we’ve certainly recommended fixed annuities as a conservative investment with an attractive return inside an IRA, we find it hard to get excited about a variable annuity in an IRA. Typically, variable annuities come with steep fees and expenses that can erode your results without protection from market volatility. Coincidentally, variable annuities typically pay some pretty nice commissions for the salesperson. If there’s a feature of the variable annuity you really like, search a no-load variable annuity provider. You were smart to seek a second opinion! Annuities can be difficult to fully comprehend. At a minimum, you’ll want to understand the features, benefits and costs of any investment options you choose.