ProductsPregunta 22 de 110
A customer wants to move the full value of an existing non-qualified variable annuity into a different insurer's non-qualified annuity. Handled correctly, this transaction:
a.Triggers ordinary income tax on the entire account value
b.Triggers tax only on the amount that exceeds the original cost basis
c.Is prohibited because annuity contracts cannot be transferred between insurers
d.Is a 1035 exchange and is not a taxable event, though surrender charges may still apply
Explicación
Section 1035 of the Internal Revenue Code allows an annuity-to-annuity exchange without current taxation as long as the funds move directly between carriers and the annuitant does not take possession. Cost basis carries over to the new contract. The exchange does not waive the old contract's surrender charges or the new contract's new surrender schedule, which is why suitability review is required.
Referencia Legal: Internal Revenue Code Section 1035Practica las 110 preguntas gratis — sin registro.
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