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Avoid Drastic Measures with a 1035 Exchange


Unhappy with your current annuity but don’t want to pay the surrender fees? Fortunately for you, there’s an easy way to upgrade to a better annuity without feeling the wrath of fees. According to a recently published article on, a 1035 exchange is the answer to all of your annuity problems.

“If you have invested in an annuity and do not know what a 1035 exchange is then it is time you learned,” the article, 1035 Exchange Explained, reports. “Simply put, a 1035 exchange is in reference to a section of tax code that allows you, the annuity holder to exchange your current annuity for another without triggering any tax liabilities.”

There are many reasons why you would consider switching annuities, but the most popular is to upgrade to a more favorable one. If you meet the correct guidelines under IRC Section 1035, you an avoid paying taxed when you decide to switch.

There are some penalties or surrender fees that may come out of your 1035 exchange. You might want to subtract these fees from any financial benefits that you would gain from the 1035 exchange to see if your decision is justifiable.

“It is not uncommon for an annuity holder to want to improve their investment over the course of its life,” the article states. “However, all the fees and taxes associated with making substantial changes to your annuity can be discouraging. But if you know about the 1035 exchange then you know that not having to worry about tax liabilities is a big push toward exchanging your annuity for a more promising one.”

If you’re considering surrendering your annuity, think about performing a 1035 exchange instead. Not only will you avoid having to pay surrender fees, but you’ll benefit from upgrading to a more favorable annuity. Talk to your life insurance agent today to see if you qualify for a 1035 exchange.

Staff Contribution: Rafael Onak


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