Section 1035 Exchange


DEFINITION of 'Section 1035 Exchange'

A tax-free exchange of an existing annuity contract for a new one.

BREAKING DOWN 'Section 1035 Exchange'

In order for the new contract to qualify as a Section 1035 Exchange, the policyholder must have exchanged his or her existing contract for an equivalent new contract. The annuitant or policyholder must also remain the same. Application of a check received for the old contract against the new contract does NOT qualify.

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  5. Internal Revenue Service - IRS

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  6. Annuitant

    1. A person who receives the benefits of an annuity or pension. ...
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