March 5, 2015

What is a 1035 exchange? When would you want to do one of these things? Why?

4 thoughts on “March 5, 2015”

  1. Kat Graham says:

    A transfer of money from one insurance policy (including annuities) to another. You would do one of these to get out of a high fee insurance policy & into a low-fee insurance policy.

  2. Elizabeth Barske says:

    A 1035 exchange is a transfer of your funds from one life insurance policy, annuity, or endowment to another policy of the same kind without having to pay taxes on the exchange. You may want to do this to replace outdated contracts with ones that have better benefits, lower fees, or different investment options. Just be sure to look at the implications of your new contract because there may be different provisions, premium rates, etc. that will change depending on where you’re at in your life.

  3. Garrett Haag says:

    A 1035 exchange is when your transfer a life insurance policy such as an annuity to a different institution. The reason to do this is to avoid taxes if you are not old enough to cash out a policy. You would want to move a policy if you are paying high fees on it. A place like Vanguard is the best location to hold an annuity if you happen to already own one. It is best to avoid a 1035 exchange by not buying the products that you would use one on in the first place but if you own one already it can be in your best interest to do one and move the money.

  4. Mike Finley says:

    Many good comments by all of you. Let’s recap.

    (1) You would use a 1035 exchange to move life insurance products that are expensive to other life insurance products that are much more cost efficient.

    (2) This protects the transfer from taxes and penalties and reduces your yearly costs.

    (3) Always be mindful of any surrender penalties that might come into play. Those wicked penalties usually go away after 7 to 10 years of ownership.

    (4) Consider moving your expensive annuity to a no-load annuity at Vanguard using this 1035 so you can reduce those yearly fees.

    (5) Learn more on the issue by going here:

Leave a Reply

Your email address will not be published. Required fields are marked *

The Crazy Man in the Pink Wig