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PHONE: 415-441-8669 | TOLL FREE: 888-50EVANS

May 31, 2018 by |

San Francisco and California Financial Elder Abuse and Annuity Attorneys: Annuities and Taxes


Beware Annuity Sales Hype

Always Think About Taxes

Incomplete information may be worse than none at all, particularly when it comes to annuities and taxes. Tax deferral is a key component of sound retirement planning.  Insurance agents push annuities as the best tool for that deferral.  Resist that pitch; you already have tax deferred savings in Social Security and in your IRAs, 401(k) plans and pension.  There are plenty of ways to accumulate tax-deferred retirement savings. With deferred annuities, on the other hand, there can be tax pitfalls you need to explore with your tax advisor when considering annuities for retirement.

We do not offer tax advice but our San Francisco and California annuity and elder abuse attorneys have seen annuity holders end up with big tax bills as a result of annuity surrenders and botched rollovers and replacements. Always review any annuity transaction with your tax advisor before you enter into it.  If you or a loved one has suffered a tax loss as a result of an annuity surrender and/or replacement, contact the annuity and financial elder abuse lawyers at Evans Law Firm at (415)441-8669, and we can help.  As California lawyers, we only handle cases in California.

First, if you decide an annuity is right for your IRA or 401(k) make absolutely sure the annuity is properly identified as either a qualified or non-qualified plan. “Qualified” versus “Non-Qualified” plans are ERISA (Employee Retirement Income Security Act) terms; the IRS follows those labels in determining tax treatment. Once the plan is designated one way or another, the designation cannot be changed and the tax consequences are permanent. We have represented buyers who thought their annuities were in a qualified plan only to find out later the account had never been set up properly.  We are not ERISA or tax lawyers, but we can represent California residents who have suffered tax losses due to an incorrect plan designation or other agent or carrier errors.

Second, if you decide to rollover an existing IRA or 401(k) annuity into another annuity, you are always better off doing a tax free exchange, referred to as a 1035 exchange, if your transaction qualifies.  In a 1035 exchange the carriers exchange qualified policies for you without you having to surrender one, get the money, and buy the other.  Salesman may try and talk you out of the 1035 exchange because it can take several months for the two carriers to process the exchange.  Don’t let them; when you surrender, take the money, and buy the new contract, you may be taxed on the total of your surrender amount. The IRS will not tax a proper 1035 exchange; any other transaction will likely be taxed

Proceed with Caution

Always review the tax consequences of an annuity with your accountant or tax preparer before you buy or replace. Be especially wary of annuities as retirement plan vehicles; they are complex and dangerous, often unsuitable, and the tax consequences can be disastrous.  Remember that you already have an annuity in the form of Social Security and perhaps under your employer’s pension plan.  Don’t lose tax deferral benefits; annuity withdrawals may be subject to tax prematurely.  Resist high-pressured sales pitches or agents who gloss over details.  Refuse quick decisions.  Consult an independent financial consultant or counsel who is not compensated by sales commissions.  Talk to your accountant or tax preparer.  Take your time and get professional help.

Contact Us

If you or a loved one purchased an annuity or other investment contract from which you or a loved one has experienced a tax penalty or other financial loss (beyond that of reasonable investment risk) in San Francisco or anywhere in California, contact California annuity lawyer Ingrid Evans and the other annuity attorneys at the Evans Law Firm at (415) 441-8669, or by email at <a href=””></a>. Our attorneys have experience with annuities, life insurance, and large insurance companies.  We can help guide your case through a jury trial or toward an equitable settlement.  We handle cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.

Some of the leading providers of life insurance and annuities in California are listed below. We are not in any way suggesting that any of these carriers or distributors has done anything wrong.  Rather, the list is provided solely as a reference for readers.

AIG/American General Life Insurance Company

Allianz Life Insurance Company of North America

American Equity Investment Life Insurance Company

American General Life Insurance Company/AIG

American National Life Insurance Company

Ameriprise Financial/RiverSource Life Insurance Company

Athene Annuity and Life Company

Aviva Life Insurance Company

AXA Equitable Life Insurance Company/AXA US

Bankers Life Insurance and Casualty Company

Brighthouse Financial, Inc./MetLife

Crump Life Insurance Services, Inc.

CUNA Mutual Group/CMFG Life Insurance Company

EquiTrust Life Insurance Company

Fidelity & Guaranty Life Insurance Company

Forethought Life Insurance Company/Global Atlantic Financial Group

Genworth Life Insurance Company

Global Atlantic Financial Group/Forethought Life Insurance Company

Guardian Life Insurance Company

Guggenheim Partners/Security Benefit Life Insurance Company

ING USA Annuity and Life Insurance Company

Jackson National Life Insurance Company

John Hancock Life Insurance Company

Lincoln Benefit Life Company

Massachusetts Mutual Life Insurance Company

Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.

Nationwide Life Insurance Company

New York Life Insurance Company

Northwestern Mutual Life Insurance Company

Pacific Life Insurance Company

Principal Financial Group

Prudential Life Insurance Company

Raymond James Insurance Group

RiverSource Life Insurance Company/Ameriprise Financial

Security Benefit Life Insurance Company/Guggenheim Partners

Symetra Life Insurance Company

Transamerica Life Insurance Company

 Unum Life Insurance Company of America

 Voya/Reliastar Life Insurance Company

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"Contacted Ingrid on an elder financial abuse case - she was responsive, knowledgeable, and easy to work with. You can tell she is passionate about this area of law and has the experience to back it up. She is an excellent choice if you are looking for a results driven attorney and highly effective advocate."
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