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Subject:  1035 Exchange - Inherited Annuity Date:  10/31/2012  1:49 AM
Author:  BaumgrenzeJohn Number:  116877 of 127753

I'm bringing this to Tax Strategies at the suggestion of ;pauleckler.'

Can the 1/3 beneficiary of an inherited fixed annuity take a cash payout (an already issued check) from the annuity issuing company and make a timely whole or partial tax-free annuity reinvestment of the cash with another annuity issuing company?

Here are the details:

The issuing company has already sent a check to the beneficiary for the 1/3 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 new 5 year term certain annuity to spread the tax liability over 5 years?

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?


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