What Qualifies as a 1035 Exchange

A 1035 exchange is a provision in the tax code which allows you, as a policyholder, to transfer funds from a life insurance, endowment or annuity to a new policy, without having to pay taxes.

What is not allowable 1035 exchange?

So what is not allowable in a 1035 exchange? Single Premium Immediate Annuities (SPIAs), Deferred Income Annuities (DIAs), and Qualified Longevity Annuity Contracts (QLACs) are not allowed because these are irrevocable income contracts.

When can you do a 1035 exchange?

3. Know how much time you have to do the exchange penalty-free. In general, fixed annuities have at least a 30 day window at the end of the surrender period when you can execute a 1035 exchange penalty-free before there is a renewal to a new rate.