UL 1035 to Annuity with Loss Offset
84 yr old client has a UL policy with $1M face and zero cash value. Looking for options to control premium. He wants to split the policy and then 1035 one of the policies to an annuity, then convert that annuity to a roth and use the loss on another contract to offset the tax due on the roth conversion. Does this sound like something that can be done? Life carrier is saying that they will not split a policy unless it has two insureds and a divorce decree specifying that. Any ideas?
Permalink Submitted by Alan - IRA critic on Thu, 2015-01-22 23:07
I don’t know about the 1035 portion, but a non qualified annuity cannot be converted to a Roth IRA. A TIRA annuity could be converted, but IRA basis is limited to non deductible contributions and rollovers of after tax QRP contributions. A TIRA annuity would have to be purchased from existing IRA money in an IRA annuity contract.