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

By |2020-08-05T22:10:06+00:00June 15th, 2020|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.

 

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: http://www.irs.gov/pub/irs-drop/n-03-51.pdf

 

 

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About the Author:

Philip Richardson
Philip proudly founded The Richardson Group over twenty years ago. His primary focus is to protect your savings and to take the confusion out of investing, with approachable steps. He is a well-known speaker, bringing a unique view to the financial world you won't get from most advisors. Philip is also a radio host with a weekly show discussing how to implement the strategies he recommends to seniors. Website: financialadvisorlancaster.com

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