If you purchased an annuity in the past and no longer want it, you will eventually be asking the question, “Can I sell my annuity?”
Well, the answer is yes. If you bought an annuity you no longer want, you do have options to get rid of it.
You can actually sell your annuity, or you can surrender your annuity and withdraw your money and put an end to the annuity.
How Can I Sell My Annuity?
How is this done? Well, one way to be done with the annuity is to surrender it. Do you remember the surrender charges we keep mentioning?
You can purposefully take on the surrender charge to withdraw the annuity altogether. These are the charges that lessen by a percentage point every year that passes. So basically after around seven years there isn’t a charge any more.
So if you’ve owned the annuity for longer than seven or eight years, you can get out of it without paying a surrender charge, but you will still pay a ten percent federal penalty if you are under fifty-nine and a half years old and taxes on the annuity’s earnings.
Now, this isn’t technically selling your annuity, but it’s about the best you are going to get. Unless you signed on a joint member of the account, you will have a hard time literally transferring the ownership of the annuity. However, there is still another option that might suffice.
Transfer to Another Annuity
Another option you have is to do an annuity exchange, which is what is also known as a 1035 exchange annuity based on the section of IRS code regulating the transfers. If the annuity is still younger than around eight years old, you will still be hit with a surrender charge, but you won’t have to pay any federal penalty or taxes on the earnings.
Again, you must be careful doing this, because while it seems like an attractive choice, there is the hidden fee in that you will be helping pay for the commission of the insurance agent who made the sale.
Oh, and the last downside of transferring your money to another annuity is that your surrender charge period will start over. So it will be as if you just bought a new annuity. The clock starts over and you have another seven or eight years to go before you can dodge a surrender charge.
Options to Sell Your Annuity
These are your two main options. You can surrender your annuity or you can transfer it to a new annuity. This is how you sell your annuity if you no longer want it.