What is a Surrender Charge?
Annuities: Withdrawals At no Charge
A deferred annuity may be surrendered to receive a lump-sum payment of the account’s value. Most annuities have a surrender period that allows withdrawal at no charge. Withdrawals during the surrender period (meaning during the contract term, remember only allow this to be a MAX of 10 YEARS!) are usually subject to charges based on several factors including the account value and the number of years remaining. DO NOT accept any surrender charges over 10%. If you have any questions please contact us. Some products will have 14% or 20% surrender changes. Insurance companies should not sell these!
Surrender-Charge Free Withdrawal Options
Annuities are long-term instruments designed to accumulate money for retirement. Consequently, they provide the best possible benefit if left intact. Many of our products provide a number of options to withdraw because you should have options. Hence, options include 10% penalty-free withdrawals. Most noteworthy, they include interest withdrawals through the easy systematic payment program. Certain products withdrawals prior to age 59½ may be subject to restrictions and a 10% tax penalty. This is because of IRS regulations. These options vary by annuity, yet may include:
- 10 % annual withdrawals.
- 5% annual withdrawals Waivers for certain medical conditions
- IRS required minimum distributions (RMD freindly)
- Substantially equal periodic payments