Pulling out gains prior to age 59.5

[XYZ99qq]

Person is 50 and puts $100k into fixed annuity (MYGA or index).
Let's just say after 3 years he has $106,000.

If he pulls out the $6,000, he owes income taxes, but will he owe a 10% penalty?
Does it matter if the money is qualified or non-qualified?

 

[bmarsh]

yes he will owe 10% penalty
for this example the full 6k would be taxable in either qual or non qual

 

[Allen Trent]

Person is 50 and puts $100k into fixed annuity (MYGA or index).
Let's just say after 3 years he has $106,000.

If he pulls out the $6,000, he owes income taxes, but will he owe a 10% penalty?
Does it matter if the money is qualified or non-qualified?

yup, 10% penalty would apply on NQ unless utilizing SEPP under 72(q)

could have mattered if it was qualified:

401k--access after separation without 10% penalty at age 55 compared to IRA at 59 1/2

Roth IRA- access to all cost basis deposits 1st before having to take out gains

Traditional-- several exemptions to the 10% rule for items like disability, higher education costs, QDRO, 1st time home buyer, medical expenses, health insurance premiums while unemployed, military

more exemptions from the 10% penalty on Qualified accounts