Dear Liz: I invested in an annuity, and now I’m sorry. How do I cancel an annuity? And what are the ramifications of doing so?
Answer: Annuities are a lot easier to enter than they are to exit. Many annuities have substantial surrender charges if you try to cash out in the first few years. You also may owe taxes and penalties on any earnings.
You may be able to get the insurer to “unwind” the annuity (essentially, refund your money without surrender charges) if the salesperson used deceptive tactics. If that’s the case, consider enlisting the aid of your state insurance commissioner.
Otherwise, you may want to consider waiting until the surrender charges no longer apply, and then cashing out or exchanging it for a lower-cost annuity. A visit with a fee-only financial planner could help you decide on the right move.