NEW YORK (CNN/Money) - A few months ago on the recommendation of a financial adviser I rolled over my 401(k) into a variable annuity. I've since had second thoughts, but I would have to pay a surrender fee to get my money out. I'm 30 years old and plan to retire at 60. What do you think I should do?

-- Jason, Milwaukee, Wisconsin

Ah, annuities! Perhaps more than any other investment, they have the capacity to confuse and confound individual investors.

What's ironic, though, is that they actually can play a significant role in retirement planning -- it's just that figuring out what that role should be and when it kicks in can be difficult.

Which is why I devote considerable space explaining the right way to use annuities in my new book "We're Not In Kansas Anymore: Strategies for Retiring Rich In a Totally Changed World." But enough plugola. Let's get back to your question.

First, I assume that when you say your rolled your 401(k) into a variable annuity, you mean that you rolled it into a variable annuity that's within an IRA rollover account. Sometimes, annuities used for such rollovers are even known as IRA annuities.

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That's an important distinction because if you simply pulled your money out of your 401(k) and put it into a regular variable annuity, you would owe taxes (plus a 10 percent penalty given your age) on the money you withdrew from the IRA.

By putting it into a variable annuity within an IRA rollover, however, you avoid triggering tax on the rollover amount.

But even assuming you invested the money in a variable annuity within a rollover IRA account, I still don't think that's such a hot idea.

Why? Well, the main benefit someone your age gets from a variable annuity is tax-deferral. You invest in one of the variable annuity "subaccounts" -- essentially, a mutual fund -- and any gains your account earns aren't taxed until you withdraw them. Under the right conditions, that can be a decent benefit.

But in this case you don't need a variable annuity to get tax deferral. You can get tax deferral by simply rolling your 401(k) stash into an IRA rollover account and investing in mutual funds -- and you can get it much more cheaply. The annual expenses for a stock mutual fund run about 1.5 percent per year, and you can easily find funds with expenses much, much lower than that by going to our Fund Screener.

Annual expenses for variable annuities, meanwhile, average more than 2 percent per year, and there are those surrender charges which siphon off a portion of your investment if you withdraw your money early on. You can find some that charge less, but because of an annuity's expense structure, the cheapest annuity is virtually guaranteed to be more expensive than the cheapest fund.

So, essentially, my problem with someone your age rolling a 401(k) or IRA or any other tax-advantaged account into a variable annuity within a rollover IRA is that you end up paying more for the benefit of tax deferral than you should.

That may make me seem very negative on annuities, but that's not the case. I think annuities can be a good way to turn a portion of your 401(k), IRA or other tax-advantaged account (or even assets in a taxable account) into an income stream once you've retired.

In fact, annuities are the only investment that can guarantee you lifetime income. But I believe that you're almost always better off waiting until you're retired or on the verge of retirement until you invest in an annuity for that reason.

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One final note for your situation. Depending on the annuity, surrender charges can last anywhere from about six years to a dozen or more, and can start as high as 10 percent, in some cases higher.

At this point, rather than incur that penalty, you might as well wait for the surrender charge to disappear (or at least dwindle to 1 percent or so) and then transfer your money to a regular IRA rollover account to preserve its tax-deferred status.

You can consider moving a portion of it back into an annuity designed to provide lifetime income at some point in the future, like 30 years in the future.

Walter Updegrave is a senior editor at MONEY Magazine and is the author of "We're Not in Kansas Anymore: Strategies for Retiring Rich in a Totally Changed World." He also answers viewers' questions on CNNfn's Money & Markets at 4:40 PM on Mondays.