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How Does a 1035 Exchange Work?

How Does a 1035 Exchange Work? thumbnail
How Does a 1035 Exchange Work?

  1. Contact a 1035 exchange company.

    • In order to do a 1035 exchange with your annuity or insurance without paying tax on the gains, you have to contact a company that performs 1035 exchanges. Start by contacting the company that you have the insurance or annuity policy with. See if it performs 1035 exchanges. If not, it can refer you to companies that can perform the transaction for you.

    Find out what options are available for the exchange.

    • When you start to interview 1035 exchange companies, find out what account options are available for you to move your life insurance or annuity funds. The 1035 exchange company can help you evaluate the options and determine which type of account is most beneficial to your personal financial situation.

    Complete the 1035 exchange paperwork.

    • Once you decide what type of account to transfer your funds into, you have to complete 1035 exchange and replacement forms. These forms will then be processed, and your funds will be moved out of your life insurance policy or annuity and into the new account you've chosen.

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