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I currently have a variable annuity that I contribute 10,000/year. I have had this annuity for about six years. I would like to get out of it. How best to do this and what penalties can I expect?
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All annuities are different. You need to read the annuity contract you received when you signed up to determine what the penalties are for:
- stopping the set contributions
- withdrawing funds (if you're under 59.5 years old there will be IRS taxes and penalties unless you do a 1035 exchange to another annuity)
- closing the account

Most annuity companies will waive some of the penalty if you take the money out over a period of years, rather than all at once.
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After contributing for about a year to an annuity, I informed myself and wanted out. The insurance company (commercial union) did not want to let me out without the stiff penalties.

I was fortunate that the agent that had signed me up had never forwarded a copy of the actual contract of the annuity. I argued that they failed to inform me in detail of the conditions that applied to the contract (although in the end it was my responsibility). For this reason (and believe me, I did a lot of complaining), they allowed me to withdraw without the additional penalties.

I would suggest to first try and explain your situation (complain!) to avoid getting hit with the penalties. If this fails then work within the contract. Good luck!
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hmhs, you asked:

<< I currently have a variable annuity that I contribute 10,000/year. I have had this annuity for about six years. I would like to get out of it. How best to do this and what penalties can I expect? >>

What “penalties” there are depends on your age and the details of the “Surrender Period” for YOUR particular contract. The Surrender Charges decline over a specified period of time and at various rates. This is specifically spelled out in your annuity contract. Some annuities have Surrender Period's that end after 6 years . . . . many are much longer. So, if you're still within the Surrender Charge Period, and decide to cash it out, the insurance company will hold back the percentage as outlined in your contract (maybe only 1% or 2% . . . . or, maybe nothing ?????). If you cash it out before age 59 ½ you'll also have a 10% tax penalty. To avoid this “tax penalty” and maybe even any surrender charge, you could annuitize it . . . . but that's subject to just what you're really trying to do here???

How to “best” get out of it DEPENDS on just what you're trying to do. There are a great many alternatives without understanding what you're trying to do. If you could explain what you're trying to do and why, then the alternatives can be narrowed down.
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hmhs -

You said: "I currently have a variable annuity that I contribute 10,000/year. I have had this annuity for about six years. I would like to get out of it. How best to do this and what penalties can I expect?"

I ask: Why did you buy it in the first place?
Why do you want out now?
How old are you?
What are you trying to accomplish?

This info will help...

Regards, PP
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