: If you fail to repay the loan on time, the IRS may reclassify it as a "deemed distribution." This means the balance becomes taxable as ordinary income.
: While your money is "borrowed," it isn't earning the interest or market returns it would have otherwise, which can shrink your retirement nest egg.
Yes, you can often borrow from your annuity to buy a house, but it is a complex move with significant trade-offs. can i borrow from my annuity to buy a house
: If your provider doesn’t offer direct loans, you might be able to use the annuity as collateral for a loan from a bank or third-party lender.
: Many experts consider borrowing from an annuity a "last resort" due to the high cost of fees and lost compound interest. : If you fail to repay the loan
: If you choose to withdraw money instead of borrowing it, you might be hit with heavy surrender charges (sometimes as high as 7–20% ) if you haven't held the contract long enough. Exceptions for First-Time Homebuyers
The IRS may waive the 10% early withdrawal penalty for first-time homebuyers (up to a ). However, you will still owe regular income tax on the amount withdrawn. : If your provider doesn’t offer direct loans,
: Some annuity providers allow you to borrow against your contract's cash value, often up to 50% or a maximum of $50,000 .