Section 1035 Exchange
A provision in the tax code that allows for the transfer of one annuity contract to a different annuity contract, without triggering a taxable event. Section 1035 refers to the specific provision of the Internal Revenue Code. Life insurance contracts may also be transferred under a 1035 exchange, and a life insurance contract may be transferred to an annuity contract. The exchange may involve the same insurer or two different insurers. The type of annuity is irrelevant under a 1035 exchange. In other words, a fixed annuity may be transferred to a variable annuity and vice versa. That said, the owner of each of the contracts must be the same. A 1035 exchange only applies to the account value of an annuity contract, not the “guaranteed benefit” values or the death benefit values of the contract. Partial exchanges are acceptable as long as the partial funds are transferred directly into the new contract. Contract owners may not directly receive funds from the original contract—this would be considered “constructive receipt” and would trigger a taxable event for the contract owner. Instead, funds must flow directly from the previous contract to the new contract and carrier.
Understanding Swiss Annuities
While it might be an unusual time to provide an explanation of Swiss annuities given what has been taking place of late with the Swiss franc and related decisions made by the Swiss National Bank, it still makes sense for any financial services consumer to understand potential benefits of these products.
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Annuity Product Persistency Levels are Increasing
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DTCC Uses Technology to Drive Cost Savings and Efficiency in the Retirement Income Industry
Adam J. Bryan is Managing Director and General Manager of the Depository Trust and Clearing Corporation’s (DTCC) Insurance &Retirement Services.
DTCC’s Insurance and Retirement business unit is the central messaging hub for...
If I leave my financial advisor will my new advisor handle my annuity?
This is a good question.