1035 Exchange in Maryland, D.C. and Virginia
Exchange like kind Life Insurance and Annuity polices in accordance with Section 1035 IRS code.
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Section 1035 Exchange:
In the United States, a tax-free replacement of an insurance contract for another insurance contract or annuity covering the same person that follow the guidelines in accordance with the conditions of Section 1035 of the Internal Revenue Code.
See IRS Bulletin for more detailed information
A tax-free section 1035 exchange is the exchange of (a) a life insurance contract for another life insurance contract, or for an endowment or annuity contract, or for a qualified long-term care insurance contract; or (b) a contract of endowment insurance for another contract of endowment insurance that provides for regular payments to begin no later than they would have begun under the old contract, or for an annuity contract, or for a qualified long-term care insurance contract; or (c) an annuity contract for an annuity contract or for a qualified long-term care insurance contract; or (d) a qualified long-term care insurance contract for a qualified long-term care insurance contract. A contract shall not fail to be treated as an annuity contract or as a life insurance contract solely because a qualified long-term care insurance contract is a part of or a rider on such contract. However, the distribution of other property or the cancellation of a contract loan at the time of the exchange may be taxable on a separate Form 1099-R.
Prohibited transactions.
If an IRA owner engages in a prohibited transaction with respect to an IRA, the assets of the IRA are treated as distributed on the first day of the tax year where the prohibited transaction occurs. IRAs that include, or consist of, non-marketable securities and/or closely held investments, in which the IRA owner effectively controls the underlying assets of such securities or investments, have a greater potential for resulting in a prohibited transaction. Report the distribution as you normally would for the type of IRA that has engaged in the prohibited transaction.
SOURCE: IRS.GOV
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