Surrender charge provisions often allow annual withdrawals of 10 percent of principal, per year, without penalty. Typically, however, during the first year, if more than the interest earned is withdrawn, a surrender charge is applied to the excess amount.
Intended to discourage short-term investing by annuity buyers, the surrender charge is made against the value of the investment when the annuity is surrendered. Charges may start at seven percent in the first year of the contract, and decline by one percent per year until it reaches zero.
In addition to these charges, part of any withdrawal usually will be subject to federal income taxes (and state income taxes, where applicable). If the owner is under 59, and part of a distribution is taxable income, there will be a 10 percent federal penalty in addition to any taxes due, unless an exception applies (e.g., disability).
Ohio National is not affiliated with, nor does it endorse or sponsor, any particular prospecting, marketing or selling system.