On Sat, 20 Aug 2005 11:06:14 CST, winterqqqq[at]hotmail.com wrote:


- quote -

In addition to any penalties/surrender charges that may be assessed by
the insurance company, the federal premature distribution penalty
(10%) would apply to the taxable gain in a non-qualified annuity if
the owner is under 59 1/2. Many, but not all, of the exceptions to
the penalty that apply to qualified plans also apply to non-qualified
annuities.

-HW "Skip" Weldon
Columbia, SC

If it is a non-qualified annuity, you might be confusing the 10%
penalty
of a qualified annuity with the 10% withholding of taxable gain in a
non-qualified annuity.


I don't know. I am still not sure. That is why I asked the question. I
am thinking that there is also a 10% penalty (separate issue from the
10% tax withholding issue) for non-qualified annuities as well. Anyone
know the real answer?

Thank you.

Dennis

On Wed, 17 Aug 2005, winterqqqq[at]hotmail.com <winterqqqq[at]hotmail.comwrote:
- quote -

Search for annuity on http://www.irs.gov/

If it is a non-qualified annuity, you might be confusing the 10% penalty
of a qualified annuity with the 10% withholding of taxable gain in a
non-qualified annuity. For example when I surrendered my whole life
policy, they withheld 10% of the taxable portion (gain over what I paid
into in with already taxed money). But I am still responsible for the
rest of the tax based on my marginal tax rate. So I changed my W-4 to
less exemptions (more withholding) to cover that and different partial IRA
to Roth IRA conversion.

Is the 10% government penalty for withdrawing before 59.5 only on the
earnings or on the full amount invested. Example, I invest 50,000 in a
non-qual annuity and it grows to 55000 and I withdraw the whole 55,000
at age 58. What does the 10% penalty apply to?

Thank you.

Dennis