by jvrcan » Mon Jan 21, 2013 09:34 pm
I'm 70 and had a endowment @65 that matured, but never took constructive receipt of the money, for the past 5 years. I initiated a 1035 exchange and 2 days later received a 1099 for 2012 for the taxable portion. Does the fact the insurance company held the mature funds for 5 years help me in arguing that I didn't take receipt of the money and allow the 1035 to supercede the 1099
Posted: Tue Jan 22, 2013 02:20 am Post Subject:
No. If the endowment matured, there was nothing with which you could do a 1035 exchange. Any insurance company that accepted funds as a 1035 exchange has done the wrong thing.
Endowments may be exchanged, but only for something with the same or less time to endowment. Yours was already past that point, and the insurance company should have distributed the money to you at that time 5 years ago. If you chose to leave it with them instead, you should have received a 1099 every year for the interest accumulation. It is not supposed to be tax deferred.
You can certainly put the money in a new endowment, but the insurance company had to report the interest because the 1035 exchange is not possible.
You should have met with your professional tax adviser five years ago and discussed the situation at that time.
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