Deferred annuity owners can get temporary, tax-free access to their account funds through an annuity loan. Generally, annuity loans can equal up to one half of the account balance. As long as loan payments are made on time, the loan amount is not taxed.
Loan payments and interest are paid back into the annuity account. If the owner stops making loan payments, or defaults, the loan is treated as a distribution. In the United States, annuity distributions are subject to income tax. A penalty tax is also charged if the borrower is under age 59 1/2. More Info click here
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