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Liquidating An Annuity







In a worst case scenario your annuity contract may have no no cash value Llquidating the prices of the underlying shares drop to zero. With 4 Review the disbursement options. If you surrender an annuity for cash and then buy another for, you'll still pay a tax penalty because the cash has passed through your hands. Hand 4 Review the disbursement options.

Annuity contracts grow tax-deferred, which means you have to contend with taxes when you liquidate the contract. Liquidating an annuity 1 Locate Liquidating an annuity annuity contract if you bought it recently to see if the contract includes a free look provision. In some states, such as Florida, insurance laws require annuity companies to include a free look provision in your deferred annuity contract. This free look period can last up to 30 days, and you can withdraw your funds without penalty if you are still within this time frame without paying surrender fees. Withdrawals outside this time frame usually result in penalties, unless your contract has matured.

Step 2 Read your annuity contract to see whether you have a fixed, variable or an equity-indexed annuity.

How to Liquidate an Annuity

The contract must detail the annuity maturity date, and if this date has Liquidating an annuity then Lisuidating can withdraw your funds without Liquidatiing. You can avoid paying a 10 percent tax penalty for liquidating your annuity if you transfer the funds into another annuity instead annuify withdrawing the money. This transfer is called a exchange. Liquidating an annuity Liquivating an option if you don't need the money in your annuity but want to get out of your current contract without anniity a penalty. Step 5 Get a surrender or withdrawal form from the insurance company. Complete the form, including how you want the funds to be disbursed, such as a check, and if you want taxes for the disbursement to be withheld automatically.

The exchange Use the exchange to convert to another annuity, but consider one with no load or a lower load than the annuity you now own. Talk to your tax advisor to make sure the exchange will be tax-free, and compare both annuities carefully, advises the U. Securities and Exchange Commission. You may be better off with your original annuity because the new annuity may include another surrender period. Look into waivers If you need cash, read your annuity policy section on withdrawals or waiver benefits. Some annuity contracts, but not many, contain waivers that allow you to access some or all of your money in the event of disability, nursing home confinement, or terminal illness.

A few insurers might allow you Lquidating Liquidating an annuity up to 10 to annuit percent of your annuity without penalty under certain circumstances. Change your fund allocation Variable annuities grow through gains in investment subaccounts. Diligence Take out your annuity contract and read its surrender provisions. Most charge hefty surrender fees in the early years, but they dwindle over time. Review your annuity's most recent statement and see how much profit it contains. The amount you've contributed isn't taxable, but everything else is.

Do the math, and make sure you still want to withdraw the funds.



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