I inherited an annuity a few years ago and left it in because I am not 65. I think if I withdraw it I have to pay income on the earnings and 10% penalty correct?

I don't need the money and it earns a fixed 4.5% annually which I thought wasn't bad. Are there any fess or other traps I should be aware of?

Call the company that underwrote it and just ask. There are thousands of different annuities with hundreds of different rules and combos of rules. Asking this board what you should do once you know what you have is one thing, but no one here will be able to answer the questions you asked until you know what the product is, how it was set up, how long it's been there, what kind of fees the company has on the product, how old you are, what your risk profile is, etc.

Not sure when the annuity was setup. I inherited from my Grandmother who was 100 when she passed. It took awhile to find someone to speak with about it when I first got it because the person who sold it to her had passed 15 years prior to her death.

I am still a few decades under 65 and I had been led to believe that annuities could not be cashed in without penalty if you were under 65. Is that correct?

Are there any risks to the annuity in principal loss or is it a sure fire return unless the underwriter goes under? The annuity is through Voya (formerly ING)?

And do I need to watch for hidden fees with an annuity? It seems to pay 4.5% per year without any issue so far.

Do what Stive said, call the annuity company. An annuity is a contract. As such, the payout options, costs, investments, riders and more are all governed by the contract specific to not only that annuity company, but also that specific product.

Casey TableTennis said:

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Do what Stive said, call the annuity company. An annuity is a contract. As such, the payout options, costs, investments, riders and more are all governed by the contract specific to not only that annuity company, but also that specific product.

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So there may or may not be a 65 year requirement? But there is not a state or federal legal requirement to be 65 before a withdraw?

Fightin_Aggie said:

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Casey TableTennis said:

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Do what Stive said, call the annuity company. An annuity is a contract. As such, the payout options, costs, investments, riders and more are all governed by the contract specific to not only that annuity company, but also that specific product.

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So there may or may not be a 65 year requirement? But there is not a state or federal legal requirement to be 65 before a withdraw?

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If you inherit an annuity you do not have to pay the 10% penalty for distribution that you would have to pay on the gain portion if it were your own annuity. Also, the age is 59 1/2, not 65.

You will pay ordinary income tax rates on the gain portion, whereas the original investment into the contract will come out tax-free.

Of course, this assumes you inherited a non-qualified annuity.

It is non-qualified. Since the agent who original signed the contract had already passed it was hard to get good information on this and the annuity company was evasive and a little misleading on the rules.

Thank you very much on the response. I had it wrong. I am going to keep it where it is for now. At least I know it is more accessible than I thought. Not real good that the earnings get hit at regular income levels.

I am pretty financially literate but annuities seem to be odd and even the "good" annuity companies do not seem to be completely transparent. Maybe it's just me.