1. 440 POINTS
    Albert Rasmussen
    owner, retireright, sc
    Yes you can withdraw from an annuity usually almost anytime. Normally based on the contract their could stiff early withdrawal penalties known as surrender charges. It could have bonus income loss as well. It all depends on the type of insurance contract it is.The length of the contract usually determines the surrender charges. Your insurance annuities by law must provide very clearly these early withdrawal charges
    Answered on October 3, 2014
  2. 37376 POINTS
    David G. Pipes, CLU®, RICP®PRO
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    Annuities are long term contracts. They have two phases. The first phase is known as accumulation. During that phase money can be withdrawn or the contract surrendered. The amount received will be the value of the annuity minus applicable surrender charges. In the second phase or “annuitization” most contracts cannot be surrendered. There are a few that allow surrenders so check with your agent if that is a concern.
    Answered on October 3, 2014
  3. 1045 POINTS
    Karl RenwanzPRO
    Renwanz Insurance & Financial Solutions, Carlsbad, CA
    You can generally withdraw money from an annuity at any time. However, you may be subject to a penalty and taxes.

    Annuities are generally meant to be long-term or at least a specified term such as 5, 7, 10 or more years. Each contact will have rules on how much you can take out annually without any penalty. Often it is 10 percent per year, after the first year. If you withdraw above the penalty-free withdrawal amount, you will pay a penalty. This annuity schedule is part of the contract and if you have questions about how to interpret, contact the agent that sold you the annuity or another qualified agent. Taxes will likely apply to any withdrawals at your ordinary income tax rate for that year.

    Also remember that if your annuity is a non-qualified account (not a Roth or IRA) and you withdraw prior to age 59 1/2, the first dollars you withdraw will be considered your gain and be taxed at whatever your ordinary tax rate is for that year. There are ways to avoid the penalty (not the tax) for the withdrawal under section 72(t) of the IRS code but you would have to agree to take level distributions until age 59 1/2 or for 5 years, whichever is longer. If you don't follow this rule, you will be subject to a 10% penalty going back to when you started early withdrawals from your annuity.

    Annuities can be a great product when the "fit" is correct. Your agent should make sure it is suitable upfront for your specific needs so you can avoid getting into an early withdrawal situation.
    Answered on October 5, 2014
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