How Often Can You Change Your Investment in an Annuity?

by Will Gish

One of many types of retirement accounts, an annuity is designed to make regular payments to you for the rest of your life when the annuity reaches maturity. Various types of annuities exist, including those that provide investment opportunities. The question of how often you can change your investment in an annuity depends upon the particulars of your contract and the bank or financial institution that issued the annuity.

Investing Through Annuities

Only variable annuities permit the investment of funds. These accounts allow you to invest your capital in securities such as stocks and mutual funds. Financial institutions that underwrite variable annuities, such as MetLife and Fidelity Investments, provide investors with a gamut of investment opportunities based on the level of preferred risk. Each stock or commodity in which you invest your annuity capital constitutes a subaccount, and the various subaccounts together comprise your annuity. Moving money form one subaccount to another – changing your investment – constitutes a transfer.


Legally speaking, you can change your investment in a variable annuity as often as you want without penalty. Internal Revenue Code Section 1035 permits unlimited investment transfers within an annuity without recognizing gains or losses. This provision protects you from having to pay taxes on capital earned from an annuity while the money remains invested, but it also means you cannot deduct capital losses in your annuity on your income taxes.

Your Annuity

The number of times you can change your investment in a variable annuity ultimately comes down to the specifics of your account. Your annuity account is described in a prospectus, which lists the rules and regulations applicable to your account. The prospectus will clearly explain what you should know regarding transfers. For example, a prospectus from Midland National states that General Account holders may transfer funds from one subaccount to another twice per year. RiverSource Annuities also permits two transfers per year, but only during two 60-day periods. Generic information from ING on transfers simply states that limitations may apply.

Choices and Changes

Variable annuities typically allow account holders to invest capital in a number of subaccounts simultaneously. This portfolio diversity theoretically helps protect against significant losses if one of your subaccounts loses value. Some transfers require paying a fee for withdrawing money from a subaccount; the fees depend upon the security or mutual fund in question. Diversifying your portfolio through the maximum number of investments may prevent the need to regularly change your investment and thus will help you avoid incurring transfer fees.