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Is the taxpayer exempt from the 10 percent penalty tax when making a pre-age 59.5 withdrawal from the annuity contract?

Posted

No.  A withdrawal from a simple investment within the IRA is not relevant to how the I distribution is taxed. The annuity exception to the early withdrawal penalty would be if the IRA was actually annuitized (or, if distributions are received in Substantially Equal Period Payments calculated over the participant's life expectancy).  Long story short, it's not as simple as taking a distribution from the annuity contract.

Good Luck!

CPC, QPA, QKA, TGPC, ERPA

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