The Ultimate Guide To Annuities

Your One-Stop Resource for Retirement

What if I bought an annuity I no longer want?

If you owned the annuity for less than 7 years you probably will need to pay a surrender charge. This charge will vary depending on the time you have with the annuity, it usually starts with 7% and it decreases 1% every year until it disappears after seven or eight years. And if you decide to close your annuity and you have not reached 59 ½ years you will pay a 10% penalty to the IRS.

Another alternative is to do a 1035 swap. This means that you can transfer the money of your annuity into another, while the surrender charge will still exist, you won’t have to pay any tax or penalty. Though it seems like a good idea, you need to know it has some disadvantages, such as having to pay sale’s commissions and that the surrender period will start again.

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