Tax Free Exchanges: Can I Move My Annuity Without Tax Liability?

By |2019-03-02T21:50:21+00:00August 28th, 2013|Annuities|

Move your annuity to add benefits without exposing yourself to tax liability

I am asked this question often.

Q. Can I move my annuity to a new company without tax liability?

A. Yes.  If you use an IRS approved 1035 exchange you may exchange your contract for a new annuity contract within your current company or you can exchange your annuity contract for a new contract in a new company.

If done correctly, this exchange will not incur a tax liability, and your deferred earned interest will remain deferred in the new contract.

The IRS provides information here:

One question to ask yourself (and your agent) is why? What benefits will you be enjoying by making a change? Is it in your best interest to make a change in your current contract?

Questions to ask:

  • Will I be incurring a new series of surrender penalties by making a change?
  • Will a bonus from the new company be involved in making a change? If so how long before the bonus is vested?
  • What is the financial rating of the new company? Is it higher or lower rated than my current company?
  • Ask the agent to explain their recommendation WHY?

The IRS provides information here:


About the Author:

Bill Broich
Bill Broich is a well-known annuity expert with over 30 years of experience. He has written hundreds of articles on annuities and other financial topics, and has been a featured commentator on TV, Radio and the Internet.