Tax Consequences for Cashing in an Annuity

[leopapio]

Been thinking of cashing in an annuity, what kind of tax consequences would I have in doing so

[Finance Globe]

Hi Leopapio,

From what I know, all of your gains will be taxed as ordinary income for the year of distribution. If you are cashing it out as a loss, then there may be some more benefits of not cashing it out.

Quoted from Kiplinger:

"Part of every annuity withdrawal is taxable as ordinary income, and if it is held inside a retirement account, the entire distribution is taxable at ordinary tax rates. But you avoid an immediate tax hit when switching from one annuity to another through a procedure known as a 1035 exchange."
Source

[NeilHalsted]

Why cashing out your Annuities? With annuities, depending on the terms of your contract you lay off the risk of loss, and reap the rewards of peace of mind that comes with knowing your money is growing safely, and is guaranteed, insured, and protected. For more insites about the consequences this will surely help you. [Link removed]