It is a tax annuity i have been paying 100.00 a month for 15 years and i want to cancel the account and withdrawal the money ,. i am not 59 1/2 and i am willing to pay the penaltiies. how do i begin this process?
I Have A Qualified Variable Annuity. What Is That Exactly?
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If you have a traditional IRA you most likely took a deduction on your tax return each year for your $1,200 contribution. If that is the case, the full amount of any withdrawal will be taxable. In addition you will pay a 10% early withdrawal penalty since you are not 59 1/2.
If you have a Roth IRA you did not get a deduction on your tax return for your contributions. With a Roth IRA you can withdraw the total of your contributions without taxes or penalty. Any earnings that you withdraw will be subject to taxes and a 10% early withdrawal penalty. If it is a Roth IRA you may want to consider withdrawing your contributions only. You can then leave the earnings in the account until you are 59 1/2 at which time they can be withdrawn tax free.
I would reinforce that some seemingly minor details can have a significant impact on the effect of the withdrawal on your taxes. Please talk with your tax adviser before finalizing your decision as to what to do.
Variable means the annuity, usually based in security products, will gain OR lose based on the investment decision the purchaser makes by their allocations and their market performance. Variable means more risk for the possibility of greater return basically.
Maybe it might be wiser to see what cash withdrawal you can make from the annuity without fees (you are allowed a certain amount without penalties or fees, and more if you are willing to pay any surrender fees that may still be applicable) and leave the annuity intact; you may also want to look at borrowing from a cash value of any whole life policy that you may have, as that also is a quick and relatively painless way to get cash.
If your heart is set upon surrendering it, please bear in mind that there will be a 10% penalty, possible surrender fees, and a major tax bite from the amount that you might expect to get. Please assume that if you are lucky, you will recieve roughly half of what you are expecting to receive, depending upon your tax bracket. This type of investment is designed specifically for saving, and stopping the process is very costly. To start the process, contact your agent who sold you the annuity, or the plan administrator, and tell them of your intentions. If you would like to discuss this further, please do not hesitate to contact me, okay? I'd be happy to help. Good luck, and thank you for asking!