• LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Penalty possible for switching annuities

by on
in Small Business Tax

Q: The annuity I bought a couple of years ago charges high maintenance fees. Will I have to pay any penalties if I withdraw my funds and switch to a different investment with lower fees? C.R., Mt. Pocono, Pa.

A: It depends. Typically, the issuer imposes a surrender fee for withdrawing from an annuity, especially in the early years of ownership. To compound the problem, the IRS assesses a 10 percent penalty tax if you withdraw from an annuity prior to age 59 1/2. But you can at least avoid the penalty tax by swapping one annuity for another annuity tax-free under IRC Section 1035. Conversely, switching to a mutual fund investment won't qualify as a tax-free exchange. Contact the annuity issuer to see what options are available to you.

Like what you've read? ...Republish it and share great business tips!

Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...

We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.

The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.

" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/22892/penalty-possible-for-switching-annuities "

Related Articles...

    No matches

Leave a Comment