Before you find out how to cash in an annuity retirement payment, you should determine the income taxes you will have to pay on the disbursal amount. If you have not reached the age of 59, a ten percent penalty may need to be paid as well. Since an annuity is a tax-deferred investment, you may want to consider using another source of funds and let the annuity continue to grow in value.
- If you have decided to cash in an annuity retirement payment, find your annuity contract to see what choices you have for the payment. Determine if you need a lump sum payment or a monthly payment. If you need to make a large purchase, the lump sum option is the one to select. Another option you have available is to only receive the annuity interest each month, which does not reduce your principal amount.
- Contact the insurance company and ask them for the forms they require in order to receive an annuity retirement payment. They will ask how you want to receive the annuity payment. They might also try to arrange a meeting with you to determine if cashing in the annuity is the best route to take for your financing needs. This is not a bad idea unless you are already certain you want to proceed with the paperwork to cash in an annuity retirement payment.
- Figure out the amount of taxes and penalty, if applicable, that you will have to pay. Make sure to set aside part of the annuity funds to cover the taxes and any penalty for taking an annuity retirement payment before you reach the age of 59 and a half.
- There are some exceptions to the ten percent early withdrawal penalty, even if you have not reached retirement age. For example, if you want to use an annuity retirement payment to pay for your child’s college education or to buy your first home, the penalty does not apply. Be certain to find out if your reason for the early annuity payment qualifies for an exception.
What Others Are Reading Right Now.
Acting, comedy and strong spirits converge in Speakeasy. When host Russell Peters interviews entertainers about all sorts of topics, neither the drinks nor the conversation is wate …
How to Turn (Almost) Every Lady’s Head
Top female stylists share their favorite men’s looks.
10 Kung Fu Movies Every Man Should See
From the absolute classics to the so-bad-they're-amazing.