ShmoopTube
Where Monty Python meets your 10th grade teacher.
Search Thousands of Shmoop Videos
Playlist Finance: Tax 52 videos
What do you need to retire? Retirement - think: 401k, pension fund, IRA, roth IRA, etc. All of these savings socked away while you worked hard are...
How do you stay rich after you...get rich? The focus: index funds, mutual funds, way more stocks than bonds. Three words: don't be stupid.
What is par value? The notional value of a stock or bond before an offering takes place. When a company is started, founders come up with a par val...
Finance: What is a 1035 Exchange? 1 Views
Share It!
Description:
What is a 1035 Exchange? A 1035 exchange allows for certain financial instruments to be transferred tax-free. The IRS is ok with it because it usually happens when individuals exchange products (like life insurance and annuities) within the same financial institution.
- Social Studies / Finance
- Finance / Financial Responsibility
- College and Career / Personal Finance
- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
- Courses / Finance Concepts
- Subjects / Finance and Economics
- Finance and Economics / Terms and Concepts
- Terms and Concepts / Insurance
- Terms and Concepts / Tax
- Terms and Concepts / Trading
Transcript
- 00:00
Finance a la shmoop....what is a 1035 exchange? well why don't they
- 00:08
give these things a name like what pathos is there in a number well it [Arrow pointing to star in the solar system]
- 00:12
makes your life miserable remembering all these numbers and frankly doesn't
- 00:15
make our life any easier writing pithy epithets about them you know as we go
- 00:20
but all right we'll try here we go...A 1035 exchange is a swap more
Full Transcript
- 00:24
specifically it's a swap relating to life insurance policies or annuities you
- 00:29
have one annuity or life insurance policy and want to exchange it for [Two life insurance policy documents]
- 00:32
another of similar value so you use at 1035 exchange to do it's like a legal
- 00:38
structure why well because a 1035 is tax-free.. tax-free yeah that's good why
- 00:45
would there be a tax when you're changing policies well an insurance
- 00:48
policy is just another form of an investment and with it comes a gain
- 00:52
usually over time so if you're exchanging an in theory you [Insurance policies exchanging]
- 00:56
could be realizing a gain that's taxable so if one policy fit your feet from age
- 01:01
25 to 45 and then it tripled in value over that time well you'd have
- 01:05
"realized a gain" if you sold it for cash and then use that cash to buy
- 01:11
another and you'd have a whole lot less cash left over after the feds you know
- 01:15
taxed you and being able to deploy that 1035 exchange tax loophole well you get
- 01:20
to keep all the value in that policy and use it to buy all the value of another
- 01:24
policy thank you insurance industry lobby and yeah you'll be dead but well [Richie Richpants gravestone]
- 01:30
others will too
Related Videos
GED Social Studies 1.1 Civics and Government
What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...
What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...
How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...