What is 1035 Exchange Life Insurance?
The 1035 Exchange Section is a provision in the tax code, which allows for a direct transfer of accumulated funds in an endowment policy, insurance policy or annuity policy to another endowment policy, life insurance policy, or annuity policy, without creating a taxable event.
1035 exchange section—also called a tax free exchange—is part of the tax code that can work substantially in your favor. For example, when you sell shares of stock or mutual funds to buy shares of a different company or mutual funds, the profits on your investment are subject to taxes. But annuities are a tax free exchange. This means you can exchange one company's product for another's with the profits from your original investment still remaining tax-deferred until you withdrawal the funds from the annuity. This includes 1035 exchange life insurance as well.
Here at DirectAnnuities.com we offer a free Annuity Exchange service to all annuity owners to make sure they are taking advantage of the 1035 Exchange Section. A licensed Direct Annuity specialist will be glad to examine your current annuity and let you know how it compares to newer annuity products on the market. You are never obligated to take advantage of this free service. The choice to exchange always remains yours.
DirectAnnuities.com does not give tax or legal advice. The comments regarding tax treatment on this website simply reflect our understanding of current interpretations of tax laws as they apply to annuities. Since tax laws are always subject to interpretation and possible changes in the future, we recommend that you seek counsel of your attorney, accountant or other qualified tax advisor regarding annuity taxation as it applies to your particular situation.