Is there a tax penalty for surrendering the cash value of a simple IRA annuity?

There is a penalty for surrendering the cash value of any annuity, including a simple IRA. Typically, anyone who holds an annuity and cashes it in at face value within the first five to seven years pays a surrender charge of up to 20 percent, according to CNN Money.

Based on the type of IRA and the insurance company that offers the annuity, withdrawing the current cash value of the annuity carries with it certain tax implications and penalties. Anyone who withdraws an IRA before the age of 59 1/2 pays a 10 percent early withdrawal penalty to the IRS along with any income taxes on the earnings from the investment, states CNN Money.