Can I Use My Annuity To Buy A Car?

Shawn Plummer

CEO, The Annuity Expert

Can I Use My Annuity to Buy a Car?

Yes, you can use your annuity to buy a car.

However, there are crucial factors to consider before doing so:

  1. Surrender Charges: Many annuities come with surrender charges, which are fees incurred if you withdraw money within a certain period after purchasing the annuity.
  2. Tax Implications: The tax treatment of your withdrawal depends on whether your annuity is qualified or nonqualified.
    • Qualified Annuities: Funded with pre-tax dollars, leading to taxes on the entire withdrawal amount.
    • Nonqualified Annuities: Funded with after-tax dollars, where only the earnings portion of the withdrawal is taxed.
  3. IRS Early Withdrawal Penalties: If you’re under 59½, early withdrawals from a qualified annuity may be subject to a 10% IRS penalty on top of regular income taxes.


Using your annuity to buy a car is a feasible option, but it’s vital to weigh the potential financial penalties and tax implications, especially in terms of surrender charges, tax liabilities, and possible early withdrawal penalties. Careful consideration will ensure that this decision aligns with your overall financial planning.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, 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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