You are better off making the switch from an annuity to the mutual fund.  An annuity is nothing more diverse than a savings account with an insurance company, although you can get a variable annuity there is no point in doing that for a retirement account.  The reason is because a variable annuity is nothing more than a regular mutual fund insured by an annuity and you are required to pay extra for the safety net.

In the end when it comes to your retirement you should always just opt for the good growth fund for your retirement.  The only advantageous time to use a variable annuity is when you have maxed out all other retirement savings and the mortgage you have is totally paid off.

The reason for that is quite simple annuities are a fund you purchase and then have the annuity pay you back monthly.  It is more a way to secure consistent income than to grow your money.  The interest paid out is barely enough to keep with inflation.  Annuities are better served to supplement a settlement than as an investment option.  That is of course unless you are buying the annuity from someone who had already had the annuity awarded them because you can purchase the annuity at a huge discount.

What typically ends up happening is the annuity is supplied as a way to repay a judgment.  The one who is awarded the annuity goes for a few years and then decides it is time to cash out their annuity and take a lump sum currently rather than continue to receive the payments over time.  If you are investor you can convince these people to take significantly less than what the annuity will eventually pay out.  Essentially you are taking advantage of someone who cannot maintain a proper financial record and want money now, usually because they are in debt as a result of consumer spending.

Annuities are not the way to have your money grow for you; but they can be a great way to supplement income if purchased under the proper circumstances.