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Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Life Insurance Cash Value vs. Surrender Value: What's the Difference? Partner Links. Related Terms Surrender Rights Definition Surrender rights refer to the right to cancel an annuity or life insurance contract in exchange for its cash value.
Hardship Withdrawal This emergency withdrawal from a retirement plan may be allowed for exceptional needs, but is often subject to tax or account penalties. Deferred Annuity A deferred annuity is an insurance contract that promises to pay the buyer a regular stream of income, or a lump sum, at some date in the future. If you wait to year 5, it may go away altogether.
Before making your decision on whether to cash out an annuity, check the surrender fees on your policy. You may be able to save by waiting a year or two before selling. Any gains that you have received from the investments within your annuity are going to be taxed.
Depending on the length of time you have had the annuity and what investments your annuity held, this will vary. If there are going to be tax consequences for liquidating your annuity, you may want to make sure it makes sense to incur an additional tax bill that year.
As fee-only, fiduciary financial advisors, our only goal is to help determine the best decision for you.
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