1035 Exchanges

[Wayne]

I have a simple question. Can a 1035 exchange be used to avoid taxes in a transfer from a Variable Annuity to a SPIA? Are they considered like products?

 

[NPCOACH]

I have a simple question. Can a 1035 exchange be used to avoid taxes in a transfer from a Variable Annuity to a SPIA? Are they considered like products?

The short answer is yes, you can. The like product is not necessarily what is meant by "like for like". It usually refers to restrictions such as the owner and the annuitant must be the same on the old and the new annuity.

Life insurance policies can be exchanged to annuities under section 1035 - but not the other way around. The rules are complex and specific. Your best bet is to contact the immediate annuity company and ask them how it needs to proceed. They may have stringent suitability guidelines. Get the answer in writing from the insurance carrier - not your IMO.

Good Luck

 

[Justin Bilyj]

ask insuranceexec, hes the brains around here, he knows annuities like a homeless man knows crack....lol

 

[gzpxyj]

I have a simple question. Can a 1035 exchange be used to avoid taxes in a transfer from a Variable Annuity to a SPIA? Are they considered like products?

Yes, you can transfer one annuity to another without tax consequencies. SPIA is one type of annuities. Of course you have to pay when you take your benefit.

 

[briko3]

As has been said before, the only exchange you can't do is LI --> annuity.

 

[Justin Bilyj]

what about IRA's or 401k's ?? I thought you could roll over those into a life policy or annuity?

 

[gzpxyj]

As has been said before, the only exchange you can't do is LI --> annuity.

You CAN do life insurance to annuity through 1035 exchange without tax consequencies.

 

[Wayne]

Thanks for the responses. I thought it was allowed but it is has been difficult to find any info on that type of transfer.

 

[gzpxyj]

what about IRA's or 401k's ?? I thought you could roll over those into a life policy or annuity?

You can roll over 401K to annuity as IRA type of account. You can transfer an existing IRA to Annuity but still an IRA type of account. You cannot put your IRA or 401K into life policy. Jim

 

[briko3]

Sorry, I meant to write that the other way around. No Annuity --> LI.
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Basically, no retirement type accounts can be rolled to a LI policy.