Surrender fee

A surrender fee is the penalty you owe if you withdraw money from an annuity or mutual fund within a certain time period after purchase. The period is set by the seller.

In the case of a mutual fund, it's designed to prevent in-and-out trading in a fund, which might require the fund manager to liquidate holdings in order to redeem your shares.

In the case of an annuities contract, there's the additional motive of covering the sales charge paid to the investment professional who sold you the product.