A 52-year-old Georgia annuitant takes a $20,000 non-qualified withdrawal of pre-tax earnings from a deferred annuity. Beyond ordinary income tax, what additional federal penalty typically applies, and does Georgia impose an extra state surtax?

Why this is the answer

Under IRC § 72(q), pre-59 1/2 withdrawals of taxable earnings from a non-qualified annuity trigger a 10% federal early-withdrawal penalty in addition to ordinary income tax on the earnings portion. Georgia does not impose any additional state-level early-withdrawal surtax on annuity distributions, unlike a few other states. The 10% penalty applies whether or not Georgia tax applies, and exceptions exist for death, disability, and substantially equal periodic payments.