Can You Exchange an Annuity for Long-Term Care?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Yes, You Can: Nonqualified Annuities

No, You Cannot: Qualified Annuities

  • Type of Annuities: Qualified Fixed, Fixed Indexed, or Variable Annuity
  • Tax Implications: Taxes due before the exchange
  • Alternative: Withdrawals from annuity to fund long-term care insurance

Using Qualified Annuity Withdrawals

Annuity Exchange for Long-Term Care Options

Annuity TypeExchange MechanismTax ImplicationsPurpose
Nonqualified Annuity1035 ExchangeNo immediate taxDirect transfer to LTC Annuity
Qualified AnnuityNot directly allowedTaxes due before exchangeWithdrawals for LTC insurance

Conclusion

Exchanging an annuity for long-term care depends on the type of annuity. Nonqualified annuities can be exchanged tax-free using a 1035 exchange form for a long-term care annuity. However, for qualified annuities, a direct exchange isn’t tax-free; instead, you can use withdrawals to fund a long-term care insurance policy. Understanding these options ensures efficient financial planning for long-term care needs.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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