Loans against differed annuity are called annuity loans. In simple words through an annuity loan owners gets access to the sum accrued in their account before the completion of the annuity period. The loan is temporary, tax free and needs to be repaid over a period of 5 years. You can usually get 1.5 times the amount in the annuity account as loan. The amount is not taxable as long as the installments are paid on time.


If in case the owner stops paying the installments the loan is considered as a distribution, the distribution then becomes taxable. In United States you will also have to be prepared to pay the penalty tax if you are below 59.5 years of age. One more downside of outstanding annuity loans is also that the owner will not be able to transfer or roll over the annuity to any other company without penalty.