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1035 Exchanges
1035 Exchanges are tax free exchanges of non –qualified sources of funds such as values within Annuities and Life Insurance contracts. |
| The Essential concept behind a 1035 Exchange is that it allows a person to move dollars that have been accumulated in a tax deferred environment to another like tax deferred environment without making a distribution and triggering a taxable situation.
It is important to note that “like to like” rules must be observed and once the transaction has taken place it is essentially irreversible because the sending company must file 1035 paperwork with the government that the proceeds have been sent.
Once the proceeds have been sent the original contract holding carrier no longer maintains a contract number or cost basis figures for the non-existent contract.
Life Insurance contracts can be 1035 exchanged to another Life Insurance Policy. Life Insurance policies can be 1035 exchanged to an Annuity.
Annuities can be 1035 exchanged to another Annuity, but an Annuity CANNOT be 1035 exchanged to a Life Insurance contract.
For more details on these types of transactions and how they may impact your personal situation call our office any time. We will be happy to assist you. |
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