mutual funds - transfer in kindsolution

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Klaxton
Posts: 17
Joined: Sun Jan 07, 2018 11:26 am

mutual funds - transfer in kindsolution

Post by Klaxton »

I have a $200,000 value annuity that I can now fully redeem without a charge. It is now managed by a brokerage firm (not sold by them) that I am considering leaving as well. Total investments are about $1,300,000.
If,for instance, I decide to go 100% with VG, what would be the best procedure to, if possible, avoid tax ramifications. The annuity is not an IRA.
For instance, I could change my annuity subaccounts (all mutual funds) to match transferee funds -maybe.
I have no significant time restraints. Of course, there are probably tax issues just in the transfer of all brokerage accounts (Mutuals and ETFs as well.
I realize that VG does not handle annuities.
Maybe the whole thing is a mute point. Any solutions. Maybe I should just contact VG, but I thought I would check with y'all.
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Wiggums
Posts: 2935
Joined: Thu Jan 31, 2019 8:02 am

Re: mutual funds - transfer in kindsolution

Post by Wiggums »

Roll the fixed annuity into another annuity contract using a 1035 exchange. This means that the transfer follows the provisions of IRS tax code section 1035. A financial adviser can assist you with this. By doing a 1035 exchange, you won’t have to claim the annuity earnings as income immediately, and you avoid paying taxes at that time (note: annuities are tax-deferred investments, so you will still have to pay taxes upon withdrawal at a later date). With a 1035 exchange, you can exchange a fixed annuity for another fixed annuity or a variable annuity.

If the 1.3 million is in a taxable account, can the funds be moved in-kind?
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