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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 11829
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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If I close a tax-deferred annuity and re-invest those funds

Customer Question

If I close a tax-deferred annuity and re-invest those funds immediately in another tax-deferred vehicle, must I claim that amount as income on my tax return?
Submitted: 1 year ago.
Category: Finance
Expert:  Lane replied 1 year ago.

I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986.

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Hi - I can help here ... Not if it's done appropriately. You need to initiate what's called a 1035 exchange (similar to a 1031 exchange for capital assets, except this is specific to insurance products)

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The insurance company you want to roll the money to will have the 1035 exchange form.

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If you just surrender, take the cash and reinvest, you'll get a 1099-R from the current insurance company and the growth in the contract will be subject to taxes (and an additional 10% tax penalty, if you're under age 59 and 1.2).

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let me know if you have questions

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lane

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Expert:  Lane replied 1 year ago.

Hi,

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I’m just checking back in to see how things are going.

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Did my answer help?

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Let me know…

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Thanks

Lane