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.

  1. Endowment

    A financial asset donation made to a non-profit group or institution ...
  2. Annuity

    A financial product that pays out a fixed stream of payments ...
  3. Eligible Rollover Distribution

    A distribution from an IRA, qualified plan, 403(b) plan or 457 ...
  4. Life Insurance

    A protection against the loss of income that would result if ...
  5. Annuitant

    1. A person who receives the benefits of an annuity or pension. ...
  6. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
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