Custodian not offering transfer NQ inherited
We are seeing more and more inherited policies, Including non-qualified. I have a custodian who is refusing to process a transfer because they say they don’t have specific language from the IRS on processing the transfer of a death benefit on a non-qualified annuity to an inherited policy. Most carriers are more than willing to do this. However, this one is refusing and there are multiple policies with significant gains. Besides a plr, is there any information anyone is aware of I can provide to their legal team to try to convince them this is in the client’s best interest? That this is preventing the heirs from taking advantage of something that will greatly benefit them?
Permalink Submitted by Alan - IRA critic on Thu, 2018-09-13 16:47
Permalink Submitted by Toby Hartley on Thu, 2018-09-13 17:17
We’re talking about taking the DB as a 1035 into a new product with a carrier that does admin NQ inherited. The current carrier is unwilling to transfer via the 1035 and is only offering other options, lump, annuitization etc. I did use that PLR in my discussions with them. See here for their response here: In regards to the rules of 1035 exchanges for non-spouse beneficiaries, the IRS has not published or released any regulations or decisions to support a 1035 exchange to a non-spouse beneficiary other than the Private Letter Ruling (PLR) that you mentioned. As you most likely know, a PLR is only pertinent to the person who requested the ruling. The 1035 exchange detailed in the PLR included a fact pattern where the beneficiary had already begun receiving life expectancy payments prior to the exchange and such payments continued after the exchange. Thus, such an exchange did not allow for continued growth and tax deferral. For these and other reasons, REDACTED is unable to process a 1035 exchange to a non-spouse beneficiary. Now, they misspoke about the type of annuity, from what i read, the beneficiary had not annuitized and thus was still receiving tax deferral on gains not yet taken. I have since sent the enter article and hope for a better answer.