Section 1035

Section 1035 is part of the U.S. tax code that allows one to exchange an existing variable annuity contract for a new annuity contract without paying tax on the income and investment gains in the current account. However, the account holders may have to pay surrender charges on the old annuity if they are still within the surrender period.

For more information, see Section 1035 of the U.S. Tax Code, or visit the IRS website.