CARD Q059
Assuming all other requirements are met, which exchange is NOT a permitted tax-deferred exchange under Section 1035?
- An annuity for life insurance
- Life insurance for an annuity
- An annuity for another annuity
- Life insurance for life insurance
An annuity for life insurance
Section 1035 permits specified exchanges, including life-to-annuity, but not annuity-to-life. Tax deferral does not eliminate contract charges.
Why each choice is right or wrong
A. An annuity for life insurance
Correct. Section 1035 permits specified exchanges, including life-to-annuity, but not annuity-to-life. Tax deferral does not eliminate contract charges.
B. Life insurance for an annuity
Incorrect. Life-to-annuity is an allowed direction when the other requirements are satisfied.
C. An annuity for another annuity
Incorrect. Annuity-to-annuity is an allowed direction when requirements are met.
D. Life insurance for life insurance
Incorrect. Life-to-life is an allowed direction when requirements are met.
Review the related terms
Use these lessons to revisit the concepts and try additional practice questions.