If you're in a variable annuity thatsocks you with high surrender fees forpulling your money out early, doing socan cost you serious cash. Many annuitypolicies have surrender charges thatstart at 7% or more for the first year,with the bail-out fee dropping year byyear. In addition, if you're not yet 591/2,the IRS is going to hit you up for a 10%penalty on the early withdrawal. Youcan avoid the tax penalty by usingwhat's known as a Section 1035 exchange,named after the provision inthe tax code that allows it. As for thesurrender charge, however, leaving yourmoney in the annuity may be the onlyway to get around it. A better choicemay be to avoid putting money intosuch annuities altogether.