Liquidating an annuity
Whether your needs are immediate or long-term, you can choose the type of annuity whose features work for your situation: Designating or updating your beneficiaries can help guarantee that your benefit is paid to those who mean the most to you.
To name or change a beneficiary, download this form, complete it and return it to the address on the form.
Sadly, many of the agents selling the vehicles (especially equity indexed annuities) don't even know exactly how they work.
It may be advisable to avoid investing in any investment vehicle that you don't understand, but this maxim is especially true in the case of annuities, because with the complexity comes additional expenses, tax consequences and illiquidity handcuffs.
An annuity is a long-term contract you purchase from an insurance company.
It is designed to help accumulate assets to provide income for retirement. If early withdrawals occur penalties may apply and earnings are taxable as ordinary income and may be subject to a 10% federal tax penalty if withdrawn prior to age 59½.
The “S&P 500” is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Nationwide Life and Annuity Insurance Company (“Nationwide”).
Standard & Poor’s and Dow Jones Industrial Average are trademarks of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Nationwide.
If you are in your 30s or 40s and just learned that you are locked in until age 59½ but want to get out now, it's important to note that you are required to pay taxes and penalties only on the gains in the annuity.
(Happy Holidays, now handle financial plans) There are, certainly, appropriate uses for annuities, but you must thoroughly research all your options beforehand—and if later you want to unload, be very careful how you choose to get out. Tim Maurer, a certified financial planner, is a vice president at the Financial Consulate and an adjunct faculty member at Towson University.
He has co-written two books with best-selling author Jim Stovall.
If you've recently been sold an annuity that you now realize just doesn't make sense for you, you may be able to get out of it unscathed by exercising your "free look" provision.
This is a kick-the-tires grace period in which you can terminate the policy and get your money back without paying a surrender charge.