Date: Sat, 20 Aug 2005 03:53:30 CST
From: efflandt@xnet.com (David Efflandt)
Newsgroups: misc.invest.financial-plan
Subject: Re: Penalty on withdrawing from non-qual annuity
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On Wed, 17 Aug 2005, winterqqqq@hotmail.com  
wrote:
> 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?

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.