rolling over variable life annuities

[Guest pcrawf]

My husband and I each have variable life annuities for 7 years now. We would like to cash these in due to high costs and poor performance. Would we suffer a tax penalty and if so, could we roll these over to Roth IRA in order to avoid such penalties?

[Ron Snyder]

My husband and I each have variable life annuities for 7 years now. We would like to cash these in due to high costs and poor performance. Would we suffer a tax penalty and if so, could we roll these over to Roth IRA in order to avoid such penalties?

You don't mention whether the annuities are owned personally, by an IRA or otherwise. Presumably they are IRAs. Rolling them over into any IRA account and changing them into another investment would not subject you to a tax penalty. However, if you roll them to a Roth IRA you would be required to pay the taxes on the proceeds and hold onto the Roth IRA for at least 5 years to avoid penalty.