Can an annuity be cashed in without a penalty or if there is a penalty how much is it?

Question

penalties for cashing in an annuity

Answer 1

Almost all annuities have declining surrender charges. The term averages from 5-10 years in most cases. This should be spelled out plainly (and should have been disclosed by your agent) in the annuity contract.

In most cases you may withdraw up to 10% penalty free each year.

Hope this helps!

Answer 2

Why cash it in?

The Majority have Free Withdrawals. Meaning NO Penalities for either the Interest Earned that Year or 10% of your account value. Need to read your annuity contract or call the phone number of your annual statement and ask them.

It may be that you had this annuity a long time and you may have NO CHARGES at ALL!

Please Remember you earned Tax Deferred Interest all these years. If you cash out completely The IRS and your State will be looking for it's cut of that interest (Taxes on the Interest)!

If you are age 59 1/2 or less, the IRS will also impose a 10% penality on all interest withdrawn. This is in addition to the normal Tax.

If you want to get out of this one specific annuity you can do a 1035 Exchange into any other Annuity you want with No Tax Impact! Just make sure the surrender charge period has ended.

You can take out the Free Withdrawal amount each year if you need income or shop arround for the Highest Paying Income Annuity (Immediate Annuity) and do a 1035 Exchange into that.

Go to http://www.jdsannuities.com/annuity_rates and look for the name of your annuity. If you find your annuity, you may be able to figure out what the charges are.

This website http://www.jdsannuities.com is a fantastic place to shop for and buy Annuities.

Answer 3

for Taxation purposes, the cash you recieve for an annuity is included as taxable income. On top of paying taxes on that, If you receive pension or annuity payments before age 59 1/2, you may be subject to an additional 10% tax on early distributions. I am assuming that this will be a lump sum distribution.

If you use an annuity to fund your IRA, you can transfer to another IRA without a tax penalty. You have 60 days in which to do this.

Also, there is what is called a section 1035 transfer, Section 1035 of the tax code allows for the tax-free exchange between like accounts: annuity to annuity, life insurance policy to life insurance policy, and life insurance policy to an annuity. However, you cannot use a 1035 transfer to go from an annuity to a life insurance policy.

Answer 4

costly EM: Annuities as you recognize are investment/retirement money owed. The age fifty 9 a million/2 penalty will word in case you do no longer abide by the situations on your settlement. Your broking provider could assist you to right here. study your settlement and notice how plenty you could pull out tax and penalty loose. resign rates would word - returned the broking provider is the expert in this section. Capital useful factors generally do no longer word. you're saying the annuity isn't in any secure motor vehicle, yet by definition the annuity is a retirement account. See IRS Pub 575. this suggestion became arranged consistent with our information of the regulation in result on the time it became written because it applies to the data which you offered. click on my profile to study extra. Errol Quinn Enrolled Agent

Answer 5

Many financial companies sell annuities and each has its own penalty for early redemption - usually on a sliding (date) scale. With most (?), however, the penalty (charge) disappears after a period of 5 years. Contact the specific financial company for their specific sliding scale of penalties.

Answer 6

Call the bank or wherever you bought the annuity from. They can advise you. Every transaction could be different in terms of penalties so we couldn't advise you on that.

Answer 7

Contact your financial advisor for more information, or call the annuity company...you should have the contact information on the confirmation statement or your quarterly statement.

Answer 8

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