1035 Exchanges

Tax free exchanges, known as 1035 exchanges, can be useful if another annuity has features that you prefer, such as a larger death benefit, different annuity payout options, or a wider selection of investment choices. Exchanges using the 1035 tax provision will not qualify the loss for a tax deduction however, the new contract can maintain the original cost. 1035 Exchanges are tax free exchanges of non qualified sources of funds such as values within Annuities and Life Insurance contracts. Certain life insurance policy or annuity exchanges are tax free according to Internal Revenue Code Section 1035.