When can you cash out an annuity?
An annuity can be cashed out at any time before annuitizing the contract. A surrender charge can be applied if the annuity is cashed out before the deferred annuity's term has been met. Generally, the annuity can be cashed out without a penalty after the term has been completed.
What are the rules for withdrawing from an annuity?
If you withdraw money from an annuity before you are 59 1/2 years old, you will generally have to pay a 10% early withdrawal penalty. In addition, you may also have to pay surrender charges if you withdraw money from a deferred annuity before maturity.
How long does money have to stay in an annuity?
In most cases, you must meet specific criteria to avoid withdrawal penalties: First, after you reach 59 ½ years old, you would no longer have the IRS-issued penalty for withdrawals. Secondly, check to see if your contract allows for an early withdrawal without penalty during the surrender period.
Do annuities have free withdrawals?
It is also important to understand that most annuities offer what is called a free withdrawal provision. This provision allows a contract owner the ability to withdraw a designated portion of their funds, often 10 percent each year, without incurring a surrender charge.