Can I Transfer An Annuity to a CD?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Can I Transfer An Annuity to a CD?

Yes, you can transfer an annuity to a Certificate of Deposit (CD), but the process and implications depend on the type of annuity you have. If it’s a standard annuity, transferring to a CD may involve taxes, potential surrender charges, and possible IRS early withdrawal penalties. However, if your annuity is an IRA annuity, you can generally transfer it to an IRA CD without incurring taxes and early withdrawal penalties. It’s important to first check for any surrender charges associated with the annuity. Here’s a breakdown:

Transferring Standard Annuity to CD

  1. Taxes: Income taxes on any earnings and possibly on principal, depending on the annuity’s funding.
  2. Surrender Charges: Check your annuity contract for any fees due to early termination.
  3. Early Withdrawal Penalties: If you’re under 59½, the IRS may impose penalties.

Transferring IRA Annuity to IRA CD

  1. No Taxes on Transfer: Since both accounts are within the IRA framework, taxes are deferred.
  2. Check for Surrender Charges: Even in an IRA annuity, early withdrawal might have costs.
  3. No Early Withdrawal Penalties: As long as funds remain within the IRA structure, IRS penalties are avoided.

Annuity vs. CD Transfer

FeatureStandard Annuity to CDIRA Annuity to IRA CD
Taxes on TransferYesNo
Surrender ChargesPossiblePossible
Early Withdrawal PenaltiesPossible (if under 59½)No
Flexibility in WithdrawalLimitedMore Flexible (within IRA rules)
Interest Rate StabilityDepends on Annuity TermsFixed for CD Term


Transferring an annuity to a CD is feasible but comes with different considerations based on the annuity type. For standard annuities, be aware of taxes, surrender charges, and early withdrawal penalties. For IRA annuities, the process is more straightforward, usually avoiding taxes and penalties, but always verify for surrender charges. Understanding these factors ensures a more informed decision. Contact us today for a free quote.

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Questions From Our Readers

If you move an annuity to a CD, do you have to tax on the profit even if you can’t withdraw the money for the CD term?

If you move money from an annuity to a Certificate of Deposit (CD), you will owe taxes on the profit. This is because annuities typically grow tax-deferred, but a taxable event occurs when you transfer the funds to a CD. The earnings portion of your annuity becomes taxable upon this transfer. If you’re looking for a similar benefit to a CD but want to maintain the tax-deferred status, a Multi-Year Guaranteed Annuity (MYGA) could be a better choice. MYGAs offer fixed interest rates for a set term, much like CDs, but they keep the tax-deferred advantage of an annuity.

Will you get taxed if you transfer funds from a matured annuity to a different bank’s Certificate of Deposit (CD)?

Yes, in most cases, such a transfer will be taxable. If the annuity was a non-IRA annuity, any gains realized upon maturation are subject to income tax at the time of withdrawal or transfer. However, if the annuity is an IRA annuity, and you transfer it to an IRA CD, this can usually be done as a tax-free rollover, provided it is executed according to IRS rules. In the latter scenario, taxes would be deferred until withdrawals are made from the IRA CD.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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