Annuity Guys®

Annuity Rates, Features & Ratings: America's trusted annuity resource. Compare best options for hybrid, index, fixed, variable & immediate annuity quotes.


Helping You Create Great Results Your Retirement Deserves!



(217)753-1515
  • Home
  • About Us
    • About Us
    • Contact Us
    • Site Terms & Disclosure
    • Privacy Policy
  • FAQs
    • Most Frequently Asked Annuity Questions
  • All Annuity Guys Videos
  • Annuity Types
    • Best Annuity Reviews
    • Market Free™ Annuities
    • Choosing an Annuity
    • Deferred Annuities
    • Hybrid Annuity Choices
      • Hybrid Annuity Pros&Cons
      • Hybrid Income Riders
      • Hybrid Annuity Guarantees & Strategies
    • Fixed Annuity Choices
      • Fixed Annuity Performance
      • Better Fixed Annuities
      • Fixed Deferred Annuities
      • Fixed Rate Annuities
      • Fixed Annuity Alternatives
      • Fixed Annuity Pros & Cons
      • Fixed Annuity Negatives
    • Index Annuity Choices
      • Fixed Index Annuity Features
      • Fixed Index Annuity Performance
      • Better Fixed Index Annuities
      • Fixed Index Annuity Alternatives
      • Fixed Index Annuity Pros & Cons
      • Fixed Index Annuity History
      • Fixed Index Annuity Negatives
    • Immediate Annuities
      • Immediate Variable Annuity
      • Immediate Fixed Annuities
    • Variable Annuities
      • Variable Annuity Features
      • Better Variable Annuities
      • Variable Annuities Disadvantages
      • Variable Annuity Alternatives
      • Variable Annuity Negatives
      • Variable Annuity Performance
    • Pre-Issued Annuities™
      • Hybrid Annuities versus Pre-Issued Annuities ™
    • Annuity Glossary
  • Articles
    • How Do MarketFree™ Annuities Work?
    • Are Annuities Safe?
    • Living Benefits
    • FIA Performance
    • Beware of FIAs?
    • Annuities & Retirement
    • Annuities & Estate Tax
    • Rollovers & Annuities
    • Annuities & Tax
    • Charity & Annuities
    • The Lost Decade
    • Best Annuity Videos
    • Social Security Benefits
  • Calculators
    • Retirement Planning Calculator — Basic
    • Retirement Shortfall Calculator — Basic
    • Immediate Annuity Calculator & Quotes
    • Fixed Index Annuity Calculator & Fixed Annuity Calculator
    • Variable Annuity Calculator & Hybrid Annuity Calculator
  • Blog
    • Annuity Guys® Weekly Annuity Video Blogs
  • Get Annuity Guys Help
    • Request Annuity Guys’ Planning Help Today
You are here: Home / Archives for Exchange

1035 Exchange – Replacing an Annuity

June 22, 2013 By Annuity Guys®

Keeping the taxman at bay may seem next to impossible these days, however with annuities the IRS/Congress blessed us with one strategy to maintain the tax-deferred status when we move from one annuity to another – the 1035 exchange.

Watch as the Annuity Guys® examine the proper use of a 1035 exchange.

[embedit snippet=”video-specialist-button”]

 

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Before we proceed any further, we do want to make sure everyone realizes that we are not advocating for exchanges of annuities. Annuities are long term products designed for retirement and replacement of annuities can mean a loss in benefits and potential to incur surrender changes and fees. Consequently, we would recommend working with an annuity specialist who can provide you with specific benefits and shortfalls needed to be considered  prior to exchanging an annuity.

The most common time a 1035 exchange is employed is at the end of the contract term which typically runs concurrently with the surrender period. If the insurance company has reduced the benefits or **guarantees on the annuity, consumers will oftentimes solicit new quotes to see if anything better exists. If they are so fortunate as to find a new annuity with better benefits, the account owner can transfer to the new company without incurring any tax consequence by utilizing a 1035 exchange.

A 1035 exchange is typically completed by filling out the appropriate transfer paperwork with the new carrier.

Lastly, not every transfer qualifies for tax shelter under the 1035 Exchange. You, for the most part must transfer the same insurance product type for the same insurance product type. This means you can swap an annuity for an annuity or life insurance cash value for an annuity but you cannot trade an annuity for a life insurance policy since life insurance is tax free and not just tax deferred like annuities.

 

Should You Exchange Your Variable Annuity?

Courtesy FINRA

If you have a life insurance or annuity contract, you may have been approached to exchange it for a new model, one with better or the latest features. You need to know that even though tax law makes the exchange income tax free and the new contract may sound better for you, you may be losing—not gaining—if you make the exchange.

We are issuing this Alert because we have found investor confusion about variable annuity# exchanges, and we have brought cases where investors were investing in variable annuities# that were not suitable for them.

This Alert will give you information on how to determine if an exchange is right for you, and how you can find out what you need to know to make a smarter decision.

Some Background

You may know that an annuity is a contract between you and an insurance company where the company promises to make periodic payments to you, starting immediately or at some future time. You buy the annuity either with a single payment or a series of payments.

You should also know that annuity contracts come in three flavors: fixed, variable and equity-indexed. Fixed means that the earnings and payout are **guaranteed by the insurance company. Variable means that the amount that will accumulate and be paid will vary with the stock, bond, and money market funds that you chose as investment options. Unlike fixed contracts, variable annuities# are securities registered with the Securities and Exchange Commission (SEC). Sales of variable insurance products are regulated by the SEC and FINRA. Equity-indexed annuities (EIAs) have characteristics of both fixed and variable annuities#. Their return varies more than a fixed annuity, but not as much as a variable annuity#. So EIAs give you more risk (but more potential return) than a fixed annuity but less risk (and less potential return) than a variable annuity#. [Read More from FINRA]

 

Filed Under: 1035 Exchange, Annuity Commentary, Annuity Fees, Annuity Guys Blog, Annuity Guys Video, Retirement Tagged With: 1035 Exchange, annuities, Annuity, Annuity Contract, Annuity Contracts, Annuity Exchange, Equity-indexed Annuity, Exchange, Exchange An Annuity, Fixed And Variable Annuities, Fixed Annuities, Indexed Annuity, Tax Deferred, Variable Annuity

 

Empowering Annuity Reference Book

 
DOWN-LOAD NOW - FREE!
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 

  • Why are Markets and Annuity Sales at All Time Highs?

    Why are Markets and Annuity Sales at All Time Highs?

    Equity markets increasing and annuity sales increasing at the same time is a little like cats and dogs playing together. …Read More »
  • Why get out of the market now?

    Why get out of the market now?

    What? Markets were on their way back to all-time highs – There must be a mistake! Did we hear the …Read More »
  • Are Annuities Improving With The Economy?

    Are Annuities Improving With The Economy?

    Annuities have been on a significant growth upswing since the equities market started tanking in 2008. So if annuities were …Read More »

Revealing Fun Video: Fiduciary Advisors Vs. Annuity Salesmen
MUST KNOW FACTS 90% of
ANNUITY ADVISORS AVOID TELLING!
  • *FIDUCIARY RETIREMENT REVIEWS
    Second Opinions Improve Retirements
     
    "For Your Retirement's Success"
     Choose a *Fiduciary Advisor who gives you Full Disclosure of Cost & Selection.
     
    Material Fact 1:
      About 90% of advisors ARE NOT REQUIRED by law to do what is best for their clients!
     
    Material Fact 2:
     Fiduciary Advisors ARE REQUIRED by law to do what's best for their clients! 
     
      Hence, clients of a fiduciary can know that their advisor chose the highest legal standard required by law to work strictly for their highest good.
     
     We estimate Fiduciaries are less than 10% of total U.S. financial service providers. Fiduciaries are held to the highest client legal standard of financial planning and investment advice.
     
     The other 90% are sales oriented advisors, brokers, bank reps, registered reps. & insurance agents, selling products on a much lower suitability legal standard, not necessarily what's best for their client!
     
       Fiduciaries also must disclose conflicts of interest that could potentially bias their advice, such as; selling products that pay them higher commissions having higher fees or costs, and their lack of investment product access limiting their client's opportunities, to name a few.
     
    Choosing your advisor can have
    "The Largest Single Impact on
    Your Retirement's Success or Failure"


  • Are Annuities a Viable Option – As Markets Soar?

    Are Annuities a Viable Option – As Markets Soar?

    The running of the bulls in Pamplona, Spain each July provides for amazing images as young men run alongside the massive …Read More »
  • Top Five Reasons Not to Buy an Annuity

    Top Five Reasons Not to Buy an Annuity

    What are the top five reasons not to allocate funds to an annuity? Based on many years of experience and an informal office survey the top five reason …Read More »
  • Annuities vs (IUL) Indexed Universal Life – How do they compare?

    Annuities vs (IUL) Indexed Universal Life – How do they compare?

    What are the differences between a hybrid index annuity and an (IUL) index universal life policy? Wow! Steve, we thought we …Read More »
  • Choosing Annuity Specialists, Local or National? Which are Best?

    Choosing Annuity Specialists, Local or National? Which are Best?

    There has been a huge shift of folks leaving local brokers and advisors to find better investment options online with …Read More »
  • Are Annuities the Best Answer to High Retirement Costs?

    Are Annuities the Best Answer to High Retirement Costs?

    The closer you are to retiring, the easier it is predicting how much income you will need in retirement to be comfortable and enjoy the …Read More »
  • What Percentage of Your Portfolio Allocation Should Be Annuities?

    What Percentage of Your Portfolio Allocation Should Be Annuities?

    Want to know just how much of your retirement nest egg you should consider for placement into annuities? The U.S. …Read More »
  • Why do 84 percent of Retirees want Annuities but only 14 percent buy them?

    Why do 84 percent of Retirees want Annuities but only 14 percent buy them?

    “You can’t always get what you want; but if you try, sometimes, well you just might find you get what …Read More »
  • What are Hybrid Annuities?

    What are Hybrid Annuities?

    Hybrid annuities, also referred to as hybrid income annuities, are essentially a type of annuity contract that allows the account …Read More »

View Our Newest Videos! Subscribe Now
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Tax Free Annuities – Limited Supply!

    Tax Free Annuities – Limited Supply!

    Tax Free annuities are entirely possible with some planning and knowledge about Roth conversions.One of the biggest negatives continually re-hashed …Read More »
  • Turning Your 401k into Retirement Income

    Turning Your 401k into Retirement Income

    “If you fail to plan, you are planning to fail!” While Benjamin Franklin was probably not referring to what he …Read More »
  • Are Annuities Improving With The Economy?

    Are Annuities Improving With The Economy?

    Annuities have been on a significant growth upswing since the equities market started tanking in 2008. So if annuities were …Read More »
  • China Tariffs – Market Corrections – Effects on Index Annuities

    China Tariffs – Market Corrections – Effects on Index Annuities

    Market’s are so unpredictable that “the experts” are frequently – DEAD WRONG! Unfortunately, you rarely here about their failed predictions, …Read More »
  • Will Rising Interest Rates affect Stocks, Bonds, and Annuities?

    Will Rising Interest Rates affect Stocks, Bonds, and Annuities?

    With President Biden overseeing our pandemic induced V shaped recovery, some experts believe the Federal Reserve Bank needs to begin …Read More »
  • A Lump Sum Buyout or Keep Your Pension –  Which is Best?

    A Lump Sum Buyout or Keep Your Pension – Which is Best?

    It is a statistical fact that “Retirees love their pensions”. Studies consistently show that pensions are favored over qualified retirement savings plans …Read More »
  • Why Should Anyone Rely on an Annuity?

    Why Should Anyone Rely on an Annuity?

    By protecting your income foundation with an annuity or annuities — and including Social Security and/or a pension as non-commercial …Read More »
  • Can Annuities Enhance Stock Market Investing?

    Can Annuities Enhance Stock Market Investing?

    The stock market is well known for its roller coaster effect of up and down account values. For many retirees, this can mean more than …Read More »
Get Newly Released Annuity Guys® Videos on Saturday Mornings
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Are Annuities a Tax Trap?

    Are Annuities a Tax Trap?

    Never buy an annuity – it is a tax trap or so the negative articles say! When I hear the words …Read More »
  • Will Rising Interest Rates affect Stocks, Bonds, and Annuities?

    Will Rising Interest Rates affect Stocks, Bonds, and Annuities?

    With President Biden overseeing our pandemic induced V shaped recovery, some experts believe the Federal Reserve Bank needs to begin …Read More »
  • 2017 Annuity Guys Market Prediction, NOT!

    2017 Annuity Guys Market Prediction, NOT!

    Wow, we must admit, we were DEAD WRONG!As Annuity Guys, we tend to avoid sticking our necks out on economic …Read More »
  • Annuities and Christmas – Do They Have Anything in Common?

    Annuities and Christmas – Do They Have Anything in Common?

    Only Annuity Guys® like us would sit around the office and discuss topics like this… Annuities and Christmas – what …Read More »
  • Choosing Annuity Potential or Income **Guarantees

    Choosing Annuity Potential or Income **Guarantees

    Have you ever heard the quip “It can be hard to remember that the objective was to drain the swamp …Read More »
  • Choosing a Fixed Annuity

    Choosing a Fixed Annuity

    If you are having trouble sleeping, you could count sheep or think about fixed annuities.Solid, unexciting, stodgy and downright boring …Read More »
  • Top Five Annuity Lies!

    Top Five Annuity Lies!

    There are annuity white lies, damnable annuity lies, and some liar-liar, sales agent/advisors who hope you won’t notice that their pants are on fire! …Read More »
  • How to Get Rid of a Bad Annuity

    How to Get Rid of a Bad Annuity

    Do you think you made a bad decision on an annuity purchase in the past? Do you think you’re stuck due …Read More »
  • Avoiding Annuity Gimmicks, Amateurs, & Charlatans!

    Avoiding Annuity Gimmicks, Amateurs, & Charlatans!

    Everyone loves a good practical joke – until the joker happens to be the salesperson who just sold you an annuity …Read More »
  • How do you Choose the Best in Class Annuity?

    How do you Choose the Best in Class Annuity?

    The latest issue of Barron’s proclaims to know and list the Top 50 Annuities. Being the Annuity Guys® that we are, …Read More »

 

Empowering Annuity Reference Book

 
Start Reading Now - Instant Download
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 
Comprehensive Site Terms and Disclosure | Privacy Policy | Copyright © 2025 Annuity Guys®


  ** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
Annuities are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.


  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping Annuity Guys website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this educational Annuity Guys Website. He still maintains his insurance license in good standing and assists his current clients.
Annuity Guys' vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)



  # Investors should consider the investment objectives, risks, charges and expenses of a variable annuity and its underlying investment options. The current prospectus and underlying prospectuses, which are contained in the same document, provide this and other important information. Please contact an Investment Professional or the issuing Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.


  ^ Investors should consider investment objectives, risk, charges, and expenses carefully before investing. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.


  ^ Eric Judy offers advisory services through Client One Securities, LLC an Investment Advisor. Annuity Guys Ltd. and Client One Securities, LLC are not affiliated.