Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
A fixed annuity can be put, “on-stop” or surrendered. If the annuity is surrendered the payout will be subject to “surrender charges” in the early years of the contract. These surrender charges are much like the charges applied to a bank CD, and the percentage of the total amount declines every year until the surrender charge disappears.
That is a great question! If you were my client, the first thing I'd ask you is why you would want to. You can certainly surrender the annuity, but it can sometimes be a bigger problem than the one that you have. If you have not had the contract long, your withdrawal will be subject to fees, penalties, and possibly taxes. These charges can considerably reduce your payout. If it is a cash flow issue, I'd look at other alternatives with you, like maybe taking out a loan from your life insurance before ending your annuity. Please contact me if you would like to discuss this a little more. Thank you for asking!
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
Generally, when you buy an annuity you're going to keep it for the life of the contract. Annuities can be cancelled early, but you will likely have surrender charges and certain tax implications involved if you do. What kind of annuity you have may have different penalties for surrendering the annuity early.
If you surrender the annuity before 59 1/2, I believe you may/can face a 10% federal tax penalty on the value of the annuity.
You should definitely talk it over with your annuity agent before making any decisions so you know what may happen if you surrender the annuity early.
I hope the information is helpful - please feel free to contact me for help or if you have any other questions. Thanks very much.
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A fixed annuity can be put, “on-stop” or surrendered. If the annuity is surrendered the payout will be subject to “surrender charges” in the early years of the contract. These surrender charges are much like the charges applied to a bank CD, and the percentage of the total amount declines every year until the surrender charge disappears.
If you surrender the annuity before 59 1/2, I believe you may/can face a 10% federal tax penalty on the value of the annuity.
You should definitely talk it over with your annuity agent before making any decisions so you know what may happen if you surrender the annuity early.
I hope the information is helpful - please feel free to contact me for help or if you have any other questions. Thanks very much.