Doing a 1035 Exchange

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
ascbc18
Posts: 5
Joined: Mon Aug 13, 2018 7:56 pm

Doing a 1035 Exchange

Post by ascbc18 » Wed Aug 15, 2018 7:04 pm

I am thinking about options for terminating my WL insurance. One way I keep reading about is to do a 1035 exchange into a VA with Vanguard or Fidelity. And so then I keep the VA until it reaches my cost basis correct?

Are there any fees/penalties when I terminate the VA? Im trying to figure out if it's worth doing the 1035 exchange vs just surrender and take the lump sum and invest elsewhere. Has anyone actually gone through this before?

Silk McCue
Posts: 1119
Joined: Thu Feb 25, 2016 7:11 pm

Re: Doing a 1035 Exchange

Post by Silk McCue » Wed Aug 15, 2018 7:30 pm

Edit: I would cash it out and invest. I wouldn’t do a 1035 and then wait for the basis to catch up. Even the Vanguard annuity will have a higher ER than a good index fund. Just put this in the past an move on.

——-

I see you already have a post regarding this WL policy here.

viewtopic.php?f=2&t=256415&p=4067574#p4067574

Since your original post reflects that your surrender value is less than your premiums you should be able to withdraw the full value without tax since your basis is less than the value.

See what this article states about this. A simple web search will find other examples.

https://www.fbfs.com/learning-center/ca ... nce-policy

Cheers

Post Reply