{"id":23114,"date":"2014-11-12T07:52:00","date_gmt":"2014-11-12T07:52:00","guid":{"rendered":"https:\/\/www.annuityfyi.com\/?page_id=23114"},"modified":"2022-12-16T17:44:31","modified_gmt":"2022-12-16T17:44:31","slug":"annuity-surrender-charges-explained","status":"publish","type":"page","link":"https:\/\/www.annuityfyi.com\/the-basics-of-annuities\/annuity-surrender-charges-explained\/","title":{"rendered":"Surrender Charges Explained"},"content":{"rendered":"<div class=\"gb-container gb-container-aaa975a4 article-container\"><div class=\"gb-inside-container\">\n\n<p>Most annuities allow you to withdraw either your interest earnings or up to 5-10% per year without a penalty (although withdrawals can impact income stream amounts and the death benefit, and may be subject to taxes and a 10% federal penalty if taken prior to 59\u00bd years of age). Beyond that, most annuities have a surrender charge \u2014 a penalty for making an early withdrawal above the free withdrawal amount. Typically this surrender charge is a percentage of the amount withdrawn, and decreases over a seven- to ten-year period.<\/p>\n\n\n\n<p>A surrender charge schedule is often depicted as a series of percentages. For example, a surrender schedule of 8%, 7%, 6%, 5%, 4%, 3%, 2% indicates a 7-year surrender period with an 8% charge in the first year after a purchase is made, 7% in the second year, 6% in the third year, and so on until the eighth year, when the surrender charge no longer applies (there are no longer any penalties for withdrawals).<\/p>\n\n\n\n<p>For example, suppose you were to purchase an annuity contract with a $10,000 purchase. The contract has a schedule of surrender charges beginning with 7% in the first year and declining by 1% each year thereafter. In addition, you are allowed to withdraw 10% of your contract value each year free of surrender charges. In the first year, you decide to withdraw $5,000, or one-half of your contract value of $10,000 (assuming that your contract value has not increased with interest earned). In this case, you could withdraw $1,000 (10% of contract value) free of surrender charges, but you would pay a surrender charge of 7%, or $280, on the other $4,000 withdrawn.<\/p>\n\n\n\n<p>This web page has been reviewed for compliance.<strong>Document reference: #1500261-4<\/strong><\/p>\n\n<\/div><\/div>","protected":false},"excerpt":{"rendered":"<p>Most annuities allow you to withdraw either your interest earnings or up to 5-10% per year without a penalty (although withdrawals can impact income stream amounts and the death benefit, and may be subject to taxes and a 10% federal penalty if taken prior to &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"Surrender Charges Explained\" class=\"read-more button\" href=\"https:\/\/www.annuityfyi.com\/the-basics-of-annuities\/annuity-surrender-charges-explained\/#more-23114\" aria-label=\"Read more about Surrender Charges Explained\">Read more<\/a><\/p>\n","protected":false},"author":5,"featured_media":24687,"parent":23096,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"categories":[117,845],"tags":[118],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/pages\/23114"}],"collection":[{"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/comments?post=23114"}],"version-history":[{"count":5,"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/pages\/23114\/revisions"}],"predecessor-version":[{"id":23134,"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/pages\/23114\/revisions\/23134"}],"up":[{"embeddable":true,"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/pages\/23096"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/media\/24687"}],"wp:attachment":[{"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/media?parent=23114"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/categories?post=23114"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.annuityfyi.com\/wp-json\/wp\/v2\/tags?post=23114"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}