NQ Annuity Distribution
If I have a contract that is under the cost basis and my client is under age 59.5 is there tax or a penalty to withdraw money from this?
If I have a contract that is under the cost basis and my client is under age 59.5 is there tax or a penalty to withdraw money from this?
Permalink Submitted by Al Fry on Fri, 2009-01-23 19:07
No, unless it is some form of annuitization payment that includes a built-in gain over basis. However annuitization payments can be exempt from the 72(q) penalty. Of course the contract itself may have CDSCs that inpose a surrender charge if the contract is still in the surrender period, and if the withdrawal amount exceeds the “free-out” amount (usually 10-15%).
Permalink Submitted by charles lore on Sat, 2009-01-24 15:46
If there is no or minimal penalty he can consider full liquidation and thus be able to deduct loss as a miscellaneous itemized deduction subject to 2% floor
Permalink Submitted by Al Fry on Sat, 2009-01-24 15:49
Be careful there, though. There may be a large death benefit or GMWB that would be lost on surrender.