What if I decide to withdraw the money?
- What is an annuity?
- What are the different types of annuities?
- Are there tax benefits to annuities?
- What are the advantages of annuities?
- What are the disadvantages?
- Do all annuities have high fees?
- What investment options do annuities have?
- What payout options do I have?
- What if I decide to withdraw the money?
- How do I know if buying an annuity is right for me?
- Should I hold an annuity within my IRA?
- What happens to my annuity after I die?
- How do I know the company will honor my future payments?
- Should I exchange my existing annuity for a new one?
- What if I bought an annuity I no longer want?
Withdrawing money from an annuity can be a costly move, so make sure you review your plan's rules and federal law before you do.
If you make withdrawals before you reach age 59 ½ , you will be required to pay Uncle Sam a 10% early withdrawal penalty as well as regular income tax on your investment earnings. (The amount you contributed to the annuity will not be not taxed.)
If your withdrawals come within the first five to seven years that you own the annuity, you probably will owe the insurance company a surrender charge. The surrender charge is typically 7% or so of your withdrawal amount if you leave after just one year, and the fee then typically declines by one percentage point a year until it gets to zero after year seven or eight.
Beware: Some annuities have initial surrender charges that can be as high as 20%. But check your plan's rules, because some annuities allow you to withdraw up to 10% of your investment without having to pay the surrender charge.
