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If she cashes in the annuity, she'll pay regular income tax on the difference between what she paid way back when and how much it cashed in for. This assumes it's a tax-deferred annuity.

A call to the company holding it on Monday will tell you what portion is taxable. A call to your accountant will tell you the tax consequences.
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If in the future mom may need to apply for Medicaid to pay for her care, whatever is done now with her investment $ needs to be flexible enough to liquidate to qualify for Medicaid. NH costs are staggering at 5k - 15k a month. Really you'd need 300/400K not to need medicaid.

Annuities - which is an insurance product - have a pretty strict contract, usually allow at the very most 10% to be withdrawn without penalty (but with a fee) on a set time schedule. You & mom need to clearly find out what type of annuity was done & what is allowed to be taken without penalty. Cashing out beyond what is allowed in the insurance contract could be costly.

Out of curiosity, what "better safe investment" are you thinking about & just how old is mom & what is her health like???
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Mishy, I spent a good part of my career working with annuities. No one here can give you a serious answer without a great deal of more information. Speak with someone from a financial services firm and have the contract in front of you when you ask your questions. There are different types of annuity contracts and each issuing company has its own contract rules and fee schedule. But to answer your final question, an annuity can typically be rolled into another annuity without tax consequences. To cash it out, there is likely tax consequences but it depends upon the gains and contract penalties.
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Question for gee whiz: would you recommend annuities as an investment. My dad invested in several with bankers life as his dementia was just starting. I have poa but these guys are miserable jerks. I may end up suing to figure out the terms and conditions attached to these d*mn things. I don't know how they got hold of him, junk mail, phone solicitation, but it's a mess with substantial amounts of money tied up that they are going to need for care soon.
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Unfortunately I think elders fall for the rhetoric annuity (and reverse mortgage) salespeople use, just as elders fall for the sob stories created by some unscrupulous "charities". Elders actually believe what they read and/or are told by a slick snake oil salesperson. My parents got caught in this trap - I was furious when I found out but the annuity had already been purchased. Our attorney agreed that at their age no one should legitimately have tried to sell them an annuity.
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That would depend on many factors. Her age, income, tax bracket and so on. I think people usually set up monthly payments so you don't have to pay taxes on a large sum.
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Mom is 76 and not in great health. We thought it would cost 10% to take any amount out, but I see if we take more than 10% out, there is a higher fee. Can the annuity be rolled into some other kind of investment?
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Tax consequences, penalties, fearful words with no real power if you find out, calculate the real answers, then factor in the fees for taking your own money out over the years. Geewiz is right.
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