As a student transferring funds from a nonqualified annuity to use toward tuition, will I be exempt from the 10 percent penalty?

Nov 27, 2018

I'd like to transfer funds from a nonqualified annuity, but I am not 65. I am a student and would like to use the money for tuition. Will I be exempt from the 10 percent penalty? 

The age for the penalty for early withdrawal of a nonqualifying annuity is 59 ½, the same as retirement accounts. The penalty is only on the earnings from the nonqualifying annuity. Please be aware of any service charges that may apply when making a withdrawal within the first five to seven years. They can be very expensive.

I did not find any exceptions to rolling the money over, except for in cases of permanent and total disability.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Scott Rubinsky, CPA, is a sole practitioner in Huntingdon Valley, Pa.

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