Sell my payments

Although the purpose of an annuity is to provide steady income at different times in your life, there are certain circumstances where you may consider selling your annuity. Selling an annuity settlement or any other structured settlements can be a tough job to do. Not only are annuities complex financial tools, there are few people who will understand the risks and benefits of taking one on.

If you’re considering selling your annuity, the process can feel overwhelming. So to help you on your journey, here are four things to get you started.

Is Your Annuity Transferable?

Before you even start to look for buyers, you need to determine whether or not your annuity is transferable. If your annuity isn’t transferable, it means you won’t be able to sell it under any circumstances. Before doing anything, you should check your contract to see if the annuity is transferable. If you’re trying to get immediate funds, you can list your nontransferable annuity as an asset or form of income and then apply for a bank loan.

Is Your Annuity a Structured Settlement?

To learn about laws regarding selling a structured settlement, you should check your contract or consult a financial expert. Most states have laws to protect any individual trying to sell their structured annuity. So if the state you live in has a Structured Settlement Protection Act, your transaction will have to be approved by a state court. However, you should not attempt to sell a structured annuity by yourself, under any circumstances.

Evaluate Your Annuity

Before shopping around for potential buyers, it’s important to evaluate your annuity to help you determine the appropriate cost. If you’re unclear about the details of your investment and its relative worth, you should consider hiring an accountant to assist you.

Understand the Tax Implications

All annuities will offer tax deferral from the time of your initial investment, but your distributions are taxable. This means that your annuity grows tax-free in the accumulation phase, but is taxed as distributions are made to you as ordinary income. If you withdraw from an annuity before age 59.5, you are also charged a 10% tax penalty. However, exceptions are made in various cases, such as the death or disability of the annuity holder.

Selling your annuity can be a complex process, but starting with these four things could make the process significantly easier.