Ask Terry Questions Surrender charges on annuity

Surrender charges on annuity

By Terry Savage on September 29, 2018 | Investments

I transferred from an annuity to an IRA , The annuity took out $1,705.14 for withdrawal/surrender charge even though I rolled it into an IRA.
Thenk you

Terry Says

Wow — lots of mistakes here. First, you should know that yes, the insurance company can take out the surrender charges if you withdraw money from the annuity before the surrender period ends. It doesn’t matter why you take the money out or what you do with it. Many annuities do allow some partial early withdrawals — but you should have checked on the amounts allowed BEFORE you withdrew. Where was your sales agent? How did you make this decision.

Second, and this is not important now that you have done it, but my question is whether they annuity was purchased with IRA money? Generally that is not a good idea, because your IRA is growing tax-deferred anyway. But if it WAS an annuity purchased INSIDE the IRA — and if the surrender period had expired — then you could roll it to another investment INSIDE your IRA.

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