Annuities can be used as qualified IRAs or as supplemental retirement programs that receive the same tax-deferred advantage as traditional IRAs. While you may have invested in an annuity as a long-term investment, you may encounter a situation where you want to pull all the money out prior to annuitizing. While this is an easy process done with one simple form, you will want to make sure you first consider any tax implications and fees associated with the surrender.
Instructions
1. Contact the financial advisor or insurance company that is servicing the annuity for you. If you are able to make an appointment, you will probably save yourself some time. Most customer service lines will now direct you to an online resource guide to search, locate and print the document yourself. An advisor will have them on hand and help you fill one out.
2. Determine if the annuity is qualified or non-qualified. Qualified annuities are IRAs where non-qualified are supplemental programs. If it is a qualified annuity, you will be assessed taxes (and possibly penalties if you are under age 59-1/2) on the entire value, where a non-qualified annuity will only tax and penalize the earnings.
3. Determine the date of policy inception. This is important because annuities require a surrender period where there is a surrender charged to money pulled out. The surrender charge is often up to 15 percent of the money pulled out, and is a period anywhere between 3 and 9 years depending on the annuity terms.
4. Calculate what it will cost to surrender the annuity.
5. Fill out the surrender form, sign and date it. Be sure to mark whether you are doing a partial surrender or a complete surrender. You should also be able to request whether or not taxes are to be withheld from the distribution.
6. Turn the policy in with a full surrender. Partial surrenders don't require this. You should have a check within two weeks.
Tags: annuity will, money pulled, where non-qualified