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Author: BaumgrenzeJohn One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 4360  
Subject: 1035 Exchange - Inherited Annuity Date: 10/29/2012 6:30 PM
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Can the 1/3 beneficiary of an inherited fixed annuity take a cash payout from the issuing company and make a timely whole or partial tax-free annuity reinvestment of the cash with another issuing company?

If so, am I correct in recalling that 60 days are allowed to complete the transaction?

If so, is the paper trail a difficult one to establish, or should the new issuer be able to help the investor through the proper steps?

Thanks,

baumgrenze
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4101 of 4360
Subject: Re: 1035 Exchange - Inherited Annuity Date: 10/29/2012 10:02 PM
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Ask the issuing company if they are willing to split the original annuity into three individual annuities. If yes, a 1035 transfer to another company is probably possible. But ask about fees. And does this reset the clock on early termination fees. Understand when the fees expire.

No, the paper trail is not difficult. Usually the previous company advises the IRS that you took a distribution and you must then report it and tell the IRS that you transferred it to another qualified account (on your income tax form for the year). A statement showing the funds were reinvested by the receiving company is usually sufficient if the IRS questions the transaction.

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Author: BaumgrenzeJohn One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4102 of 4360
Subject: Re: 1035 Exchange - Inherited Annuity Date: 10/30/2012 11:54 AM
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Paul,

Thank you for your quick reply.

You say:

Ask the issuing company if they are willing to split the original annuity into three individual annuities.

The issuing company has already sent a check for the share of the annuities. Can these funds be still be reinvested in a new annuity under Section 1035, i.e., can the tax status of the funds (63% taxable at the time the check was cut) be maintained in a 5 year term certain annuity to spread the tax liability over 5 years?

Thanks,

baumgrenze

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4103 of 4360
Subject: Re: 1035 Exchange - Inherited Annuity Date: 10/30/2012 10:15 PM
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That's a question for the Tax Strategies board--

http://boards.fool.com/can-dues-be-a-charitable-contribution...

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Author: BaumgrenzeJohn One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4104 of 4360
Subject: Re: 1035 Exchange - Inherited Annuity Date: 10/31/2012 1:51 AM
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Thank you, Paul.

I reposted the question, with the details in this thread, on Tax Strategies.

baumgrenze

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