Annuity withdrawal charge is the fee imposed when an owner withdraws funds from an annuity in excess of the contractTMs free-withdrawal amount during the surrender-charge period. Often expressed as a percentage of the amount withdrawn or of the account value, withdrawal charges are part of the surrender schedule and decline over time. They are designed to protect insurers from early-policy lapses that undermine long-term pricing assumptions and commission recovery. Withdrawal charges are distinct from tax penalties, which are imposed by the IRS rather than the insurer.

Advisors discuss annuity withdrawal charges when clients request additional funds beyond penalty-free allowances or consider surrendering contracts. They calculate the net amount the client would receive after charges and evaluate alternatives such as taking smaller withdrawals over multiple years. In suitability and disclosure processes, advisors review withdrawal-charge schedules to ensure clients understand the cost of early access. Carriers may make exceptions in hardship cases, but this is not guaranteed. Understanding annuity withdrawal charges enables advisors to help clients weigh immediate liquidity needs against long-term value and to plan withdrawals strategically.