Questions about annuity hardship withdrawal without showing proof

You generally won't have issues with the IRS because they don't typically require hardship documentation for annuities like they do with 401(k)s or IRAs. The "hardship" qualification is often handled at the company level rather than being an IRS requirement for annuities. What matters to the IRS is that you properly report the distribution as income on your tax return. The annuity company will send you a 1099-R form showing the withdrawal amount and any taxes withheld. Make sure those numbers match what you report on your tax return. The distribution is likely taxable as ordinary income, and if you're under 59½, you might also owe a 10% early withdrawal penalty unless you qualify for an exception.

After dealing with a similar situation last year, I found taxr.ai (https://taxr.ai) incredibly helpful for sorting through my annuity withdrawal questions. I was also surprised when my annuity company didn't ask for hardship documentation, and I was worried about potential tax issues. The tool analyzed my 1099-R and other tax documents, then guided me through exactly how to report everything properly. It specifically identified that my medical expense deduction would offset some of the tax impact from the withdrawal, which I wouldn't have realized on my own. It really simplified what could have been a complicated tax situation with my annuity withdrawal.

I have to admit I was wrong about taxr.ai. After my skeptical comment earlier, I decided to give it a try with my annuity withdrawal situation, and I'm actually impressed. The system specifically identified that my withdrawal qualified for the substantially equal periodic payments exception (SEPP), which my tax preparer had completely missed. I was able to avoid the 10% early withdrawal penalty entirely, which saved me over $2,000. The document analysis feature correctly interpreted the distribution code on my 1099-R and explained the exact tax implications. It also created documentation I could keep in case of an audit. Very different experience than I expected.

If you're still concerned about potential IRS questions regarding your hardship withdrawal, I highly recommend using Claimyr (https://claimyr.com) to get direct answers from the IRS. I was in a similar situation with an annuity withdrawal last year and had questions about documentation requirements. After waiting on hold for hours trying to reach the IRS myself, I used Claimyr's service and they got me connected to an IRS agent in about 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The agent confirmed that for annuity withdrawals, the IRS doesn't require hardship documentation like they might for qualified plans, but they did recommend keeping records of how I used the funds.

I need to eat crow about Claimyr. After posting my skeptical comment, I decided to try it because I desperately needed to talk to someone at the IRS about my annuity withdrawal and couldn't afford to spend another day on hold. It actually worked exactly as described. I got a call back in about 20 minutes connecting me directly to an IRS representative. The agent confirmed that for my specific situation, I didn't need to worry about providing hardship documentation to the IRS since that's handled at the company level. They also walked me through how to properly report my withdrawal on my tax return to avoid any flags. Saved me hours of frustration and gave me peace of mind. Sometimes admitting you're wrong feels pretty good.

One important thing to remember is to keep your own records of the hardship even if the company didn't require documentation. I went through an audit three years ago related to an annuity withdrawal, and while the IRS didn't question the hardship qualification, they did want to verify whether I qualified for an exception to the 10% early withdrawal penalty. Having my medical bills organized and ready to show was a lifesaver. The audit went smoothly because I could demonstrate my expenses exceeded the 7.5% AGI threshold. Better to have documentation and not need it than vice versa!

Does anyone know if there's a limit to how many hardship withdrawals you can take from an annuity? I had to take one earlier this year for about $9,000 for home repairs after storm damage, and now I'm facing some medical bills. My annuity company also didn't ask for documentation, but I'm worried about taking a second withdrawal in the same year.

I went through a very similar situation last year with my annuity withdrawal. Like you, I was surprised they didn't ask for documentation, but after doing some research and talking to my tax preparer, I learned this is actually pretty normal for annuities. The key things to remember: you'll get a 1099-R form early next year showing the withdrawal amount and any taxes withheld. Make sure to report this accurately on your 2025 tax return. Since you mentioned medical bills, keep all those receipts and documentation - if your out-of-pocket medical expenses exceed 7.5% of your adjusted gross income, you might be able to avoid the 10% early withdrawal penalty by using the medical expense exception. I'd recommend calculating whether you qualify for that exception now so you can plan accordingly. If you're under 59½ and don't qualify for an exception, you'll owe the penalty plus regular income tax on the withdrawal. But the fact that your annuity company didn't require hardship proof shouldn't cause any issues with the IRS - that's between you and the insurance company, not a tax requirement.