An immediate annuity gives you a steady income for a set number of years. Some even pay you for as long as you live. But, generally the deal is that once you plunk your money down in exchange for the guaranteed payments, you can’t get it back.

Then there’s the tax-deferred annuity. Here you put away money with the hope of having it available to help fund your retirement or some need in the distant future. Yet, if you want to get out of it completely or remove a lot of money early on, you could face steep surrender charges.

So, how can you get your hands on your cash? Sell annuity payments! Annuity owners can use the secondary market to create liquidity from an asset that usually isn’t considered as liquid as, let’s say, a money market fund.

Caution: Not All Annuities Qualify

Just because you own an annuity doesn’t mean you can always sell annuity payments for cash to help you save for the future, invest in a new company or spend it on your kids.

Annuities that are in a tax-qualified retirement plan are ineligible; so, too, are life-only immediate annuities, since the payments are based solely on your life expectancy and are, therefore, not guaranteed.

Before selling annuity payments on the secondary market, take these four cautionary steps:

1.    Contact the company that sold you the annuity. As the industry continues to add more options, you might discover that your annuity has a payout feature you never knew about.

2.    Contact your financial advisory or insurance agent. He or she should be able to explain your options and help you get the best offer on the secondary market.

3.    Think about how much cash you need. You might only have to sell off a portion of your annuity. Then you could let the balance grow tax-deferred or even delay the payments.

4.    Find out how much you will owe in income taxes if you sell annuity payments. Don’t wait until you get the check in hand. By then, it’s too late, and you might end up sending a big chunk of what you just received to the IRS.