Annuity Taxation for withdrawals

[FBN2007]

What is the name of your state (only U.S. law)? MD

If you withdraw money out of an annuity before age 59 1/2 are you penalized 10% by the IRS on the earnings only or on the entire amount (principal and interest) in the account? Also are the earnings taxed as ordinary income or capital gains?

 

[tranquility]

The penalty is on the taxable portion, so, earnings. (However, if you don't withdraw it all, earnings are withdrawn first.)

On a withdrawal, the income is ordinary.