What it is Buy one of these tax-deferred investments and you'll pay a fee for the funds (or subaccounts), insurance costs ("mortality and expense risk") and administrative charges. Tack on more for a guaranteed death benefit. Oh, and if you don't like the annuity, you'll face a fee to bail out.

What's so bad These fees can add up to 3% or more a year, effectively wiping out much of the tax benefit. Surrender charges generally start at 7% of your assets and decline by 1% a year thereafter. Some annuities, particularly equity-indexed annuities, have surrender charges that start as high as 20% and stick around for well over a decade.

Ouch! ING's Golden Select annuities nick you for as much as 4.4% a year, according to Morningstar; Security Benefit Life's AdvanceDesigns costs up to 4.1%.

What you can do Grab tax savings other ways: Your 401(k) and IRAs offer the same tax deferral without the steep annual fees. If you still want a variable annuity, Fidelity (800-343-3548), T. Rowe Price (800-638-5660) and Vanguard (800-851-4999) sell lower-cost options.