Tax Free Long Term Care Payments from an Annuity

The Pension Protection Act of 2006 has a provision that will allow for tax free long-term care payments from an annuity product.  The law will also allow for Section 1035 Exchanges of older annuity products into the new hybrids.

The combined or "hybrid" product has been in development within insurance companies over the past several years.

The anticipated launch date for these new products is January 1 2010--the date that the provision in the Pension Protection Act is intended to go into effect.

It appears, however, that relevant a tax-related issue remains unresolved.  The American Council of Life Insurers is working with the IRS to resolve the issue before the January 1 deadline.

Source: Investment News

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