How to Get Money From a Tax-Sheltered Annuity
Although annuities can be excellent long-term savings vehicles, there can be times when you need the entire proceeds of the contract immediately. Cashing out of an annuity contract generally entails the same process regardless of whether the contract is fixed or variable. The process is fairly straightforward, but may differ from one annuity carrier to another.
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Instructions
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Find out who your annuity carrier is if you don't know already. The company name will be printed on the monthly statement, along with a contact phone number. You can write to the company and request that your contract be liquidated, but it's much faster to call their customer service department.
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Tell the rep that you need a distribution and ask what paperwork you will to sign to do this. They will either mail you a distribution form or have a downloadable copy on their website. You may need to give them a reason why you want the money. You may be given the same form for either a partial or total distribution; you would just check the correct box or otherwise notate the amount of your withdrawal on the form.
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Complete the form in full and send it to the annuity carrier. Be sure to sign in every place that is required, and have your spouse or anyone else listed as a co-owner of the contract sign it as well. The carrier may accept a faxed or scanned copy as well. If your annuity is inside an IRA, then you will need to complete an IRA distribution form as well.
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Prepare to pay an early withdrawal penalty as well as taxes on all of the income you receive, if you are under age 59 and a half. Report the taxable proceeds of your contract as ordinary income according to the numbers that are printed on the 1099R Form your annuity carrier will mail you.
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