An annuity matures on the date written into your contract when the insurance company must stop holding your money in its growth phase and start paying it out. That date is almost always tied to the owner’s age, and most insurers set it somewhere between 85 and 95. It is a ceiling, not a start line: you can usually begin receiving payments years or even decades earlier, but you cannot push past it without the insurer’s agreement, and federal tax law may force distributions to begin well before the contract date arrives.
Where the Date Is Set and What It Triggers
The maturity date is locked in when you buy the annuity and listed on the specification or data page, usually within the first few pages of the contract alongside your policy number and premium amount. It marks the end of the accumulation phase, when your money earns interest or investment gains, and the beginning of the payout phase.
Some insurers will let you request a change in writing. If your contract permits it, extending the maturity date gives you more time for tax-deferred growth. The insurer cannot push the date past its own maximum age cap or any applicable federal tax deadline, whichever comes first.
Maturity Is Not the End of the Surrender Period
These two dates get mixed up constantly, and they are not the same thing. The surrender period is a separate, shorter window, usually five to ten years from purchase, during which the insurer charges a penalty for withdrawing more than a small portion of your account. A typical schedule starts around seven percent in the first year and drops about one percentage point annually until it hits zero. Many contracts also let you take up to ten percent of the account value each year during this period without triggering the charge.
When the surrender period ends, you can access your full account value without penalty, but the contract keeps going. Your money can continue growing on a tax-deferred basis until the maturity date arrives, which may be decades later. The surrender period controls withdrawal flexibility; the maturity date controls when the insurer must begin distributing your funds.
Why Insurers Set a Maximum Age
Every annuity contract includes a maximum age at which the accumulation phase must end regardless of what you have requested. The cap generally falls between 85 and 95, depending on the insurer and the type of contract. It exists in part 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.
When Tax Rules Force an Earlier Deadline
Even if your contract says the maturity date is 90, you may be required to start taking money out much sooner. The rule depends on how the annuity was funded.
Qualified Annuities
A qualified annuity is one purchased with pre-tax dollars inside a retirement account such as an IRA or 401(k). These annuities follow the same required minimum distribution rules as other retirement accounts. 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) The RMD requirement overrides any later maturity date in the contract.
Non-Qualified Annuities
A non-qualified annuity is purchased with after-tax dollars outside of a retirement account. These are not subject to RMD rules while you are alive, so the contract’s maturity date controls. But if the holder dies before the annuity start date, IRC Section 72(s) generally requires the entire balance to be distributed within five years, or, if paid to a designated beneficiary, distributions must begin within one year of death and 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
If the maturity date arrives and you have not chosen a payout option, the insurance company does not wait. 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 beyond what the annuitization option provides generally disappears.
The tax consequences 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, you lose control over the timing and size of your tax bill. Contacting the insurer at least a year before maturity gives you time to evaluate your options.
Your Payout Choices
When the maturity date arrives, or whenever you decide to begin distributions, you typically choose from several payout methods:
- Lump sum. The insurer pays the entire contract value in a single distribution. You get immediate access to all your money, but the taxable gain lands in 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, preserving a death benefit and more flexibility. Not every contract offers this.
You begin the process by submitting an election form to the insurer with your chosen option and banking details. Some insurers require a notarized signature. The first payment or lump sum is typically issued within a few business days after the company processes your election.
Moving the Money Before Maturity
If you want more time for tax-deferred growth, or you simply want a different contract, a Section 1035 exchange lets you move the funds to another annuity (or to a qualified long-term care insurance contract) without triggering a taxable event.3Office of the Law Revision Counsel. 26 USC 1035 – Certain Exchanges of Insurance Policies The exchange must happen as a direct transfer between insurance companies. 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 to begin taxable distributions, arrange the exchange well in advance.
If You Are Thinking About Starting Early
Maturity sets the latest date for distributions, not the earliest, but acting too early carries its own cost. Withdrawals from an annuity before age 59½ are subject to an additional 10 percent federal tax on the taxable portion of the distribution. For non-qualified annuities, this comes from IRC Section 72(q); for qualified annuities held inside IRAs or employer plans, a parallel penalty applies under Section 72(t).2Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts The penalty sits on top of ordinary income tax: on a $10,000 early withdrawal with $6,000 of taxable gain, you would owe regular income tax on the $6,000 plus a $600 penalty.
Several exceptions eliminate the 10 percent charge even if you are under 59½:
- Distributions to beneficiaries after the holder’s death.
- Permanent disability of the owner.
- A series of substantially equal periodic payments based on your life expectancy, taken at least once a year, continued for at least five years or until age 59½, whichever is later.
- Distributions from an immediate annuity contract.5Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
Between the maturity ceiling the insurer sets, the RMD or Section 72(s) deadlines the IRS imposes, and the 59½ floor on early access, the window for choosing your own timing is narrower than it looks. Pull your contract, confirm the maturity date and maximum age, check whether the annuity is qualified or non-qualified, and give yourself at least a year before any of those deadlines to make a decision rather than inherit one.