An annuity matures on the date written into your contract when the insurance company must stop holding your money in its growth phase and begin paying it out. Most contracts set that date to fall when the owner reaches a specific age between 85 and 95, though you can usually start receiving payments long before then. The maturity date is a ceiling on how long the accumulation phase can last, not the earliest you can tap the money.
Where to Find Your Maturity Date
Your contract’s specification or data page, usually within the first few pages of the document, lists the maturity date alongside your policy number and premium amount. The date is locked in at purchase, though some insurers will consider a written request to move it later. Any extension is bounded by the insurer’s own maximum age limit and by federal tax deadlines, whichever comes first.
The cap exists partly because federal tax law does not allow annuities to serve as indefinite tax shelters. Under the Internal Revenue Code, annuity contracts must eventually distribute their value, and the IRS can treat amounts made available at maturity as taxable income whether or not you actually withdraw them.
Maturity Is Not the End of the Surrender Period
These two dates get confused often, and they are not the same thing. The surrender period is a separate, shorter window, usually five to ten years from purchase, during which you pay a penalty for withdrawing more than a small portion of your money. A typical schedule starts at around seven percent in the first year and drops by about one percentage point each year until it reaches zero. Many contracts also let you pull out up to ten percent of the account value each year during this window without triggering the charge.
Once the surrender period ends, you can access your full account value without penalty, but the contract keeps going. Your balance can continue growing on a tax-deferred basis for years or decades until the maturity date arrives. Surrender charges control withdrawal flexibility; maturity controls when the insurer must begin distributing your funds.
When Distributions Must Start Sooner Than the Contract Says
How you funded the annuity can force payouts to begin before the contract’s maturity date.
A qualified annuity, purchased with pre-tax dollars inside a retirement account such as an IRA or 401(k), follows the same required minimum distribution rules as any other retirement account. For 2026, you generally must begin taking RMDs by April 1 of the year after you turn 73. That age rises to 75 for people born in 1960 or later, starting in 2033.1Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs) Even if your annuity contract’s maturity date is age 90, the RMD rule overrides it and forces distributions to start at 73.
A non-qualified annuity, purchased with after-tax dollars outside a retirement account, is not subject to RMD rules, so the contract’s maturity date is the controlling deadline. Section 72(s) of the tax code still imposes a limit at death: if the holder dies before the annuity start date, the entire balance must generally be distributed within five years, or, if paid to a designated beneficiary, distributions must begin within one year of death and be spread over that person’s life expectancy.2Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
What Happens If You Do Nothing at Maturity
If the maturity date arrives and you have not chosen a payout option, the insurance company does not wait for instructions. Most contracts include a default provision that automatically converts your balance into annuity payments, typically a life annuity or a period-certain payout. Once that automatic annuitization kicks in, you lose the ability to take lump-sum withdrawals, and any death benefit other than what the annuitization option provides generally disappears.
The tax consequences of inaction can be significant. The entire gain in your contract could become taxable in the year of maturity if the insurer issues a lump sum, or the taxable portion of each payment will be reported to the IRS as payments begin. Either way, control over the timing and size of your tax liability is gone. Contacting the insurer at least a year before the maturity date leaves room to evaluate options and avoid a default election.
The Payout Options You Can Choose Instead
When you make the election yourself, you typically pick from several payout methods:
- Lump sum. The insurance company pays the entire contract value in a single distribution. You get immediate access to all your money, but the taxable gain is concentrated into one year.
- Life annuity. The balance converts into payments guaranteed for your lifetime. Payments stop when you die, so heirs receive nothing unless the contract includes a minimum period guarantee.
- Joint-and-survivor annuity. Payments continue for your life and then for the life of a second person, usually a spouse. Monthly amounts are lower because the insurer expects to pay longer.
- Period-certain annuity. Payments last for a fixed number of years, such as 10 or 20. If you die during that period, your beneficiary receives the remaining payments.
- Systematic withdrawals. Some contracts let you take scheduled partial withdrawals rather than fully annuitizing. This preserves a death benefit and more flexibility but is not available in every contract.
To begin the process, you submit an election form to the insurer with your chosen option and banking details. Some insurers require a notarized signature. Once the company processes your election, the first payment or lump sum is typically issued within a few business days by direct deposit or mailed check.
Moving to a New Contract Before Maturity
If you want to shift your money to a different annuity, perhaps one with lower fees, better investment options, or a later maturity date, a Section 1035 exchange lets you do it without triggering a taxable event. Under this provision, you can exchange one annuity contract for another annuity contract, or for a qualified long-term care insurance contract, and defer all taxes on the accumulated gain.3Office of the Law Revision Counsel. 26 USC 1035 – Certain Exchanges of Insurance Policies
The critical requirement is that the exchange must happen as a direct transfer between insurance companies. The funds cannot pass through your hands. If the old insurer sends you a check and you then buy a new annuity, the IRS treats the original contract as surrendered, and the gain becomes taxable.4Internal Revenue Service. Revenue Ruling 2007-24 – Section 1035 Certain Exchanges of Insurance Policies
Timing matters. A 1035 exchange should be completed before the contract reaches its maturity date. Once the annuity matures, the IRS treats the proceeds as amounts received on the maturity of a contract, which are taxable under the income-first rules of Section 72(e).2Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts If you are approaching maturity and do not want taxable distributions to start, contact the insurer well in advance to arrange the exchange.
If You Die Before the Maturity Date
Maturity assumes the owner lives to reach it. If you die first, federal tax law and the contract’s death benefit provision together determine what happens to the money. For non-qualified annuities, Section 72(s) generally requires the entire remaining interest to be distributed within five years of the owner’s death.2Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts An exception applies when a designated beneficiary elects to receive distributions over their own life expectancy, provided those payments begin within one year of death.
Many annuity contracts also include a guaranteed minimum death benefit, ensuring your beneficiary receives at least as much as you originally invested even if the contract’s market value has dropped. The designation on the annuity contract, not your will, controls who receives the funds, so keeping beneficiary information current matters. Updating your mailing address and beneficiary designations well before the maturity date helps the insurer reach your heirs without delay.