Cashing Out An Annuity Early

There may be surrender charges early distribution taxes and other taxes associated with cashing out.

Cashing out an annuity early. With a few exceptions you can cash out payments from your structured settlement or annuity at any time. The irs charges a 10 early withdrawal penalty if the annuity holder is. You can cash out of an annuity during the surrender period but may be assessed a penalty in doing so. An alternative to withdrawing money early is selling future payments to a purchasing company at a discount.

If you can find another way to get the money you need you might want to consider leaving your annuity alone. Cashing out of an annuity can be expensive depending on when you are doing it. In addition if you are not yet 59 1 2 years old you may be assessed a 10 percent tax penalty for cashing out early according to the internal revenue service. However making early withdrawals may incur costly surrender charges and tax penalties.

If you take your money out early you ll pay a surrender charge to the annuity company which will be deducted from your withdrawal. Payments may be a better option. The insurer issuing the annuity charges surrenders fees if funds are withdrawn during the annuity s accumulation phase.