Withdrawal and Liquidity

For lifetime income you can take money out after the age of 59 1/2. If you take your money out before you reach the age of 59 1/2, you will owe an additional 10 percent early withdrawal penalty to the IRS.","reminder":"\Reminder: An important goal of retirement planning is to produce guaranteed lifetime income. Any distribution taken prior to your retirement reduces the lifetime income amount. Most annuity companies do provide a 10% Free Withdrawal feature and give some flexibility to the owners.

A Free Withdrawal allows for a 10% withdrawal annually. A characteristic of a Free Withdrawal is that it provides some flexibility for partial withdrawals. Another factor of Free Withdrawals is that they have limited access to the cash value during the Surrender Period.

It is a waiting period for an investor before s/he can withdraw without a penalty, despite some exceptions. There are some exceptions on early withdrawals during the first 5 to 10 years.","reminder":"\Reminder: For people in their 40's or early 50's, the IRS requires 401(k) and IRA owners to wait till at least age 59 1/2 to start withdrawal, and thus annuities' 5-to-10 year wait might not be an issue.

{"subtitle":"This depends on the type of annuity that you choose.","answer":"With multi-year guarantee annuities and fixed index annuities, you typically have limited liquidity as allowed in your annuity contract. This liquidity varies by company and contract, but there is typically a percentage you can take out each year. Some companies have riders with fees charged for the right to make these withdrawals.

Surrender charges apply when you take more than the allowable amount out of your annuity. With most contracts there is a surrender charge schedule that outlines what the percentage penalties are in each contract year. Remember, there can also be a Market Value Adjustment applied to withdrawals in excess of the allowable amount.","example":"\Example: Suppose a $12,000 from a $50,000 contract: Policy Year: 4 Free Withdrawal: $50k x 10% = $5k Amount Subject to charge: 12k - 5k = 7k Charge in %: 7% Charge Amount will be $490","reminder":"\Reminder: -Surrender Charge (penalty) is expressed as a percentage (%) on excessive withdrawals \n -Surrender charges are only imposed if you give up the annuity before the surrender period, which means that you can avoid the fee by holding it past that period