An annuity withdrawal can cost any amount that is agreed upon when it is purchased, depending on the type of annuity. This usually includes a surrender period of about 7 years.Continue Reading
There are several types of annuities, and the fees associated with them are based on the provider of the annuities as well as the agreed-upon percentages during purchase. There are "no surrender" annuities that do not require a fee for people to withdraw 10 percent or more of their investment or their yearly interest earnings; however, these withdrawals will still be taxed by the government. These withdrawals can be fined if the person withdrawing is under 60 years old. Most annuities will cost 3 percent or more per year, according to the Washington State Office of the Insurance Commissioner.
Most common are the annuities with withdrawal penalties. Companies are more likely to offer a bonus with these because the surrender period can be longer and, in the end, the company may still make more money off of someone than the bonus they invested, according to Annuity FYI. This usually includes the company adding between 3 and 5 percent of the initial investment to the annuity for immediate withdrawal, but the surrender period could jump from 7 years to 9 years. Careful price comparison can help with this, as some companies may raise the prices of fees to recoup that bonus amount as soon as possible. All of this will be in the contract for the investor to sign before purchasing the annuity.Learn more about Investing