1035 exchange

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Topic Author
exoilman
Posts: 713
Joined: Wed Oct 15, 2008 1:38 pm
Location: New Jersey

1035 exchange

Post by exoilman » Fri Mar 22, 2019 2:25 pm

DW has an inherited annuity that is all cash earning 3.25%. She had a five year window to do the exchange. She has ~ 1 year before the window closes. My question is can it be exchanged into other than cash only? And can it be switched to another firm like Vanguard or Fidelity?

Thanks
Sam

lakpr
Posts: 1838
Joined: Fri Mar 18, 2011 9:59 am

Re: 1035 exchange

Post by lakpr » Fri Mar 22, 2019 4:15 pm

Vanguard does offer annuities and can do a 1035 exchange. Don’t know the mechanics as we never needed it, but please do give Vanguard a call

pascalwager
Posts: 1476
Joined: Mon Oct 31, 2011 8:36 pm

Re: 1035 exchange

Post by pascalwager » Sun Mar 24, 2019 1:17 am

I recently completed an Advisors Edge VA 1035 exchange to Vanguard and it went smoothly and quickly. My old insurance company seemed glad to see me go, and that probably helped. I'm now saving thousands each year on fees. And I didn't have an online account before, but now I do.

Carl53
Posts: 1794
Joined: Sun Mar 07, 2010 8:26 pm

Re: 1035 exchange

Post by Carl53 » Sun Mar 24, 2019 4:01 am

MIL is beneficiary of recently deceased FIL nonqualified annuity. I was quite surprised, disappointed, when the insurance company said that they would not do a 1035 exchange and would be cutting a check. Significant chunk is going to go to taxes rather than if it could have been spread over even a few years the taxes might have been totally avoided.

DarkHelmetII
Posts: 329
Joined: Mon Jul 24, 2017 12:25 pm

Re: 1035 exchange

Post by DarkHelmetII » Sun Mar 24, 2019 5:46 am

Carl53 wrote:
Sun Mar 24, 2019 4:01 am
MIL is beneficiary of recently deceased FIL nonqualified annuity. I was quite surprised, disappointed, when the insurance company said that they would not do a 1035 exchange and would be cutting a check.
Is it even possible for an insurance company to outright disallow a 1035 exchange? I could imagine they may make it difficult (intentionally or not) through cumbersome processes etc... but did not think they could just simply keep one from doing such an exchange.

not4me
Posts: 597
Joined: Thu May 25, 2017 3:08 pm

Re: 1035 exchange

Post by not4me » Mon Mar 25, 2019 1:17 pm

DarkHelmetII wrote:
Sun Mar 24, 2019 5:46 am
Carl53 wrote:
Sun Mar 24, 2019 4:01 am
MIL is beneficiary of recently deceased FIL nonqualified annuity. I was quite surprised, disappointed, when the insurance company said that they would not do a 1035 exchange and would be cutting a check.
Is it even possible for an insurance company to outright disallow a 1035 exchange? I could imagine they may make it difficult (intentionally or not) through cumbersome processes etc... but did not think they could just simply keep one from doing such an exchange.
It would be interesting to know if the FIL had already inherited the annuity from someone else. I've heard of cases for low balance annuities, but that doesn't sound like it applies here

Carl53
Posts: 1794
Joined: Sun Mar 07, 2010 8:26 pm

Re: 1035 exchange

Post by Carl53 » Mon Mar 25, 2019 2:55 pm

No he had not inherited it.
I've since came across this link which indicates that my MIL might have been eligible to have been offered a five year option. https://www.investopedia.com/ask/answer ... bution.asp
Unfortunately when I asked about other options they said there were none and would be cutting a check. Probably cost MIL approaching $2k in taxes for the lump sum distribution where as if it could have been spread, there would have been no taxes.

Topic Author
exoilman
Posts: 713
Joined: Wed Oct 15, 2008 1:38 pm
Location: New Jersey

Re: 1035 exchange

Post by exoilman » Tue Apr 23, 2019 11:40 am

I contacted Fidelity about my wife's AIG annuity. They said that it can be exchanged into Fidelity Personal Retirement Annuity (all tax deferred with many choices). Has anyone had experience with this transfer. Also I read here on the BH's that they will offer some incentives for the transfer.

Thanks
Sam

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