As it’s impossible to provide an exact answer to this question, answering this one requires more thought than simply replying yes or no. Annuities’ transferability depends on specific terms of each contract as well as tax rules. When looking to transfer an annuity it is wise to consult a financial advisor who can guide your decision according to these specifics as well as any tax implications. Using SmartAsset’s free tool you can locate up to three pre-screened advisors serving your area for free introduction calls that you can schedule with them to find which advisor best meets your needs!
Deferred income annuities (also referred to as income annuities) are the most frequently purchased type of annuity. These annuities may be transferred, provided they haven’t yet begun creating payments and don’t involve confinement restrictions – which includes Single Premium Immediate Annuities (SPIAs), Deferred Income Annuities (DIAs), and Qualified Longevity Annuity Contracts (QLACs).
Other annuities do not qualify for transfer because they already begin producing income, such as immediate annuities or indexed annuities with an income rider. Nonqualified annuities held outside IRAs and employer retirement plans, however, may be moved if they have not been annuitized – known as 1035 exchange – though deferred income annuities that have begun payments cannot.
Dependence upon trust terms and goals when considering whether an annuity should be transferred into an irrevocable trust depends upon its terms, as well as your overall estate planning goals. A transfer can reduce taxable estate by moving assets out of your personal name into an irrevocable trust; however, any gift made will be subject to federal gift tax rules; should its total value surpass your annual gift tax exclusion limit, you could incur taxes.
Transferring an annuity between insurance carriers typically incurs surrender charges as you’re technically not undertaking a 1035 exchange, which requires identical ownership. However, if switching from Multi-Year Guarantee Annuities to Fixed Rate Annuities or Indexed Annuities to Indexed Annuities may allow you to avoid these fees by changing ownership names on both annuities.
Moving nonqualified annuities directly to cash accounts such as checking and savings will likely trigger taxes, so it would be wiser to place them into a trust (such as revocable living trust or family trust ) instead. This will keep it out of your taxable estate while still giving you control of distributions; however, any annuity transferred this way is subject to gift tax rules similar to any other asset transferred into it.