One of the most common ways that personal injury cases are resolved is with the use of a structured settlement. The way that the structured settlement cash is paid out to the injured party through an annuity. What are annuities? Buying annuities is usually something people do to help manage their money in retirement, but in cases of structured settlements, they basically serve as a tax shelter for those funds and are a way to pay out the money to the injured.
If you really want to be rid of an annuity, the easiest thing you can do is surrender, cash it out, and pay the penalties and charges that come with it. How much you’ll be charged to surrender the annuity really depends on how long you’ve owned it, so take that into account before making a final decision. If you’re not out of the woods on having to pay that surrender charge, it’s probably more worthwhile to just hang on to it until the time comes.
If you can’t or don’t want to surrender your annuity, you can also opt to transfer it under certain circumstances. In some cases, you can just transfer it to another annuity without incurring any tax punishments. If you own the annuity in an already established retirement account like an individual retirement account (IRA), then you can cash it out and reinvest in a different annuity.
If you don’t want to deal with the annuity altogether — like if you inherited it for example — there is something else you can do. If you don’t want to surrender or transfer those funds, you can also opt to sell. There are a number of companies out there that are in the business of buying annuities. The process isn’t that complicated, but you would basically get a quote, fill out some paperwork, and the company would send you an annuity lump sum payment.
Have you ever had to get rid of a bad annuity? Tell us about it in the comments. Helpful links.