have client with 90k in a Variable annuity. We do not need the death benefit any longer so we do not want to pay the extra rider fees.

We are exchanging the 90k to two contracts. One annuity for principle protection for 25k and the other 65k to another annuity that is low cost.

Question: with all the new rules, is this okay or will the partial exchange to two different companies make any of the two sums taxable to my client?

Thank you,
Douglas