Annuities, a popular savings tool for those looking for a low risk product with decent returns, often start out with great interest rates and attractive bonuses. Sometimes, however, after the first few years, the interest rates begin to fall. Over time, your annuity may begin to under perform, earning less interest than you would like. You want to earn a better return on your annuity, but you may believe that you are stuck until the annuity’s maturity date.

Many people are not aware that there is a section of the IRS tax code that actually works in their favor, called the 1035 exchange. Under a 1035 exchange, one annuity policy can be exchanged for another annuity policy, without creating a taxable event. As a result, you can use (or exchange) your principal and interest earnings in a poorly-performing annuity to purchase a new annuity with a better rate without paying any taxes.

However, you will be responsible for any early surrender charges, if applicable. Surrender charges are determined by “when” you remove funds per the details of your existing annuity policy. Every policy has a set term and charges a different surrender percentage amount that generally is reduced each year you own your annuity. If the new annuity has a higher interest rate, and the older annuity has lower surrender charges, you may be better off in the long run with the new, higher-paying annuity that earns more over time than you paid in surrender fees.

BuyAnnuitiesOnline.com offers a free Annuity Exchange Evaluation service to customers and non-customers alike – visit http://www.buyannuitiesonline.com to take advantage of this service. Our Annuity Specialists will evaluate your current annuity policy and will let you know if there are better annuities available to you. Or, call the BuyAnnuitiesOnline.com Specialists at 1-800-994-3023 for a free, personalized Annuity Exchange Evaluation, right over the phone.