Question

K has recently divorced his estranged wife and is in need of cash. He has a variable annuity from which he is considering withdrawing several thousand dollars. What penalty, if any, should he expect to pay in this situation?

Answer 1

K can expect to pay a penalty when withdrawing money from a variable annuity after divorcing his estranged wife. The penalty amount will depend on his age and the terms of the annuity contract.

Step-by-step explanation:

The penalty that K can expect to pay when withdrawing money from a variable annuity after divorcing his estranged wife would depend on several factors, including his age and the terms of the annuity contract.

Typically, withdrawals from a variable annuity made before age 59½ are subject to a 10% early withdrawal penalty imposed by the IRS. However, if K can demonstrate that the withdrawal is part of a Qualified Domestic Relations Order (QDRO) as a result of the divorce settlement, the penalty may be waived.