Can I sell my annuity?
Yes, you can sell annuity payments for cash. If an annuity does not fit your financial needs or desires, you can work with an annuity factoring company to sell some or all payments for a lump sum of cash. The most common options are 1) entirety, 2) partial, and 3) lump sum.
1) Entirety – selling an annuity pays out the entire investment as a lump sum and forfeits the annuity holder’s ability to receive future periodic payments. This is the most straightforward way to sell an annuity.
2) Partial – a partial buyout allows the annuity holder to sell a portion of his/her annuity payments and still receive periodic income without forgoing the tax benefits. For example, if the seller needs money immediately, he/she can sell years 1 – 5 of his/her annuity payments in exchange for a lump sum. After those five years have lapsed, the periodic payments will continue. Also, if the seller needs additional funds, he/she can buyout another portion of the remaining payments in exchange for lump sums.
3) Lump Sum – like a partial buyout, an annuity holder can choose to sell a portion of annuity settlement/structured settlement, in exchange for a lump sum. This approach gives the seller more flexibility in choosing the amount of the lump sum, which would be deducted from future payments.
How to sell annuity payments
Selling your annuity payments is a multi-step process that doesn’t have to overwhelm you. The five steps below will help you move forward with confidence:
- Speak with a finance professional.
If possible, speak with a certified public accountant, tax attorney, or certified financial planner experienced with annuity transactions. They can help you understand financial and tax implications, and other options for obtaining cash. - Find a trustworthy annuity company.
Contact multiple factoring companies that focus on buying annuities to improve your chances to get a good deal. Our team offers free reviews of payment schedules and amounts to determine what your annuity is worth and how much money we can offer. - Review your offers.
Remember that the present value of your payments is worth less than the total of your scheduled payments. Your offers will be less than the present value to cover fees and company profit. Decide whether you find any of the offers meet your financial needs. - Finalize Your deal.
Sign the sales paperwork to make your deal official after evaluating your offers and deciding which works best. Be sure to read everything carefully and keep a copy for your records. - Receive your funds.
Payment timing depends on the particulars of your deal. Your cash may arrive as quickly as a couple of weeks of signing your contract, but we commonly see it take longer. Annuity Freedom strives to keep our clients updated on the timing of their payments.
How much cash can I get if I sell my annuity payments?
The amount you receive will depend on various factors such as the size of your investment or structured settlement annuity, your payment schedule, the number of payments remaining, and the discount rate. The “discount rate” is the fee the buyer charges in order to profit on the sale and will directly impact the amount of your lump sum. After considering in all of these variables, you will be in a better position to decide if selling your annuity makes sense for you.
Also, it’s a good idea to ask any potential buyer for a detailed breakdown of their quote to ensure there are no hidden fees and all charges are transparent. Since there are various factors involved in formulating a quote, it’s a good idea to request quotes from more than one company to ensure you can make an informed decision.
Do I get cash quickly after starting the process of selling my annuity?
The actual process of selling an annuity can take a couple of weeks and up to 6 to 8 weeks if it is a structured settlement requiring court approval. As a result of this lengthy timeline, many companies (ours included) will pay you what’s known as an “advance.” Once you agree to move forward and sell us your annuity, we can offer you an immediate cash advance, provided you are qualified, which will be recouped later from the full amount after the sale is finalized. Our advances are interest free and there are no additional fees. If your need cash quickly, an advance can be a good way to secure some up front money to help pay any outstanding debts.
What are the cons to selling an annuity?
There are some drawbacks to selling an annuity. For example, selling an annuity can incur a “surrender charge,” which can be as much as 10%. In addition, the seller won’t be able to collect any future payments from the annuity, which can be problematic in terms of retirement planning. Also, there are likely to be tax implications for selling your annuity.
Taxes when selling your annuity for cash
Are you considering selling payments? Are you concerned about the repercussions of selling? Learn more about tax implications from selling your annuity.
All tax information that we provide is general. We are not holding ourselves out as tax experts. Further, we do not know your financial or life circumstances. We recommend that you consult with a tax professional when considering a transaction that includes selling annuity payments.