NQ Stretch Post Death 1035 Exchange

Jan 10, 2016

  1. tkirk97
    Offline

    tkirk97 Expert

    Posts:
    64
    Likes Received:
    0
    Anyone know of a fixed or fixed Indexed that will take a Non-Qualified Stretch, Post Death 1035 Exchange. I know Jackson National will, but is there anything else? Thank you in advance.
     
    tkirk97, Jan 10, 2016
    #1
  2. JoeAnnuity
    Offline

    JoeAnnuity Expert

    Posts:
    31
    Likes Received:
    0
    Yes, Integrity will do this, they have a pretty good program. Very solid Indexed Annuity. Their fixed rates aren't so good however
     
  3. CALTCAgent
    Offline

    CALTCAgent Guru

    Posts:
    2,396
    Likes Received:
    275
    State:
    California
    Hope I'm not hijacking here,

    I am also interested in carriers that offer this and also one for myself, so comp. is not important on that one. Just the best possible annuity.

    Pre 59.5 early withdrawl tax question:

    If a person under 59.5, takes more than the RMD, do they get hit with the pre 59.5 early withdrawl penalty ? ( I am thinking yes, but want to confirm )
     
  4. Tahoe Ray
    Offline

    Tahoe Ray Guru

    Posts:
    2,723
    Likes Received:
    432
    State:
    Nevada
    I thought they only took NQ stretch on their SPIA and SPDA?

    ----------

    That depends on if the contract was owner or annuitant driven (and assuming a post 1982 contract)

    Death benefits or distributions paid out as a result of the death of the owner (in an owner driven contract) are an exception to the 59 1/2 rule.

    Any gain after death, however, could be subject to penalty unless you're following the SEPP (or annuitize the contract).

    It gets more confusing if you have an annuitant driven contract with a separate owner (other than the deceased).

    This is a better question for a good CPA.
     
  5. CALTCAgent
    Offline

    CALTCAgent Guru

    Posts:
    2,396
    Likes Received:
    275
    State:
    California
    Thanks for the response!

    The contract originated 1/1/1976.

    That brings me to another subject.

    I was reading that there was some law that:

    If your annuity was issued before October 21, 1979, your heirs will be very happy. Your annuity will get a step-up in basis to the market value at the time of your estate and no income tax will be owed on the past earnings. This was such a great deal for the taxpayer that Congress took away the goodies, but your annuity was "grandfathered" to retain the special tax benefit. If you exchange your annuity, even in a tax-deferred Section 1035 exchange, the grandfathered benefit will be lost.



    With this contract the beneficiary can take over as owner and not have to take a lump sum or 5 year distribution.

    So I wonder if the 10% rule would apply on any wihtdrawls for a pre-59.5 beneficiary who is now the owner ?

    The insurance carrier says they will code it as a pre 59.5 early withdrawl. They don't sound like they are sure if this is correct and of course said seek tax advice.

    How exactly this thing will be taxed is confusing to me. In fact what exactly tax laws apply is hard since it is not what I am familiar with in individual annuities.

    This is what the contract says:

    NEA Federal Credit Union & Communication Workers of America Local Unions Supplemental Pension & Serverance Fund Trust.

    Individually designed Non Qualified 401 K, originated on 1/1/1976

    Article 1 definitions

    1.2 Annuity contract. The term annuity contract means the group annuity contract issued by the insurance company to the trustees.


    I do think I'll need a very good CPA that specializes in insurance. I asked my CPA and he wasn't sure, he is still checking it out.
     
  6. steve90751
    Offline

    steve90751 New Member

    Posts:
    3
    Likes Received:
    0
    This is very help full
     
Loading...