What is an Annuity Exchange? Can I exchange my Annuity?
The answer is yes as long as it is done by the book. A tax-free replacement of an insurance contract for another insurance contract or annuity covering the same person that follow the guidelines in accordance with the conditions of Section 1035 of the Internal Revenue Code. The exchange has to be like kind exchanges and owners have to be the same person.
See IRS Bulletin for more detailed information
A tax-free section 1035 exchange is the exchange of (a) a life insurance contract for another life insurance contract, or for an endowment or annuity contract, or for a qualified long-term care insurance contract; or (b) a contract of endowment insurance for another contract of endowment insurance that provides for regular payments to begin no later than they would have begun under the old contract, or for an annuity contract, or for a qualified long-term care insurance contract; or (c) an annuity contract for an annuity contract or for a qualified long-term care insurance contract; or (d) a qualified long-term care insurance contract for a qualified long-term care insurance contract. A contract shall not fail to be treated as an annuity contract or as a life insurance contract solely because a qualified long-term care insurance contract is a part of or a rider on such contract. However, the distribution of other property or the cancellation of a contract loan at the time of the exchange may be taxable on a separate Form 1099-R.
Only you can decide
We offer all kinds of Annuities. They do change over the years and sometimes the rates and product features are improved from your current contract. We only want to provide you with the most up to date information we have. We can show you all of your options, tax consequences if any, and prospective returns for the future. If you think you are a candidate for an Annuity Exchange, please feel free to reach out to us so we can provide you with all the information needed to make an informed choice.