Non-Qualified Post-Death 1035 Exchage
Here’s a non-IRA but a retirement question. I have a client who’s father passed away earlier this year. He owned a Non-Qualified fixed annuity with Riversource. Recently, the IRS issued a (PLR) 201330016 clarifying the opportunity for beneficiaries to 1035 a death benefit to a new carrier of the beneficiary’s choice. Riversource will not do a 1035 transfer directly to a new carrier that allows a “Stretch” of the non-qualified assets. Is there a way to indirectly do the 1035 which would not be a non-taxable event? Thank you in advance!
Permalink Submitted by Alan - IRA critic on Thu, 2014-10-30 20:44
It cannot be done indirectly. Despite the PLR, it is apparently difficult to pair up both an insurer willing to accept the 1035 and a current carrier who is willing to release. No sense in looking for one to accept the annuity if the current carrier is adamant. Eventually, competition will probably force carriers to commit to releasing the contract when written or their production will suffer. In this case, the insurers are the problem, as this is the type of PLR that probably can be relied on.