I have a endowment 65 policy that I was told on short notice that i had take the proceeds from. I was told that I couldn’t roll it over into an IRA but that it would disqualify me from taking a Saver’s Credit on my federal tax return for putting any other funds into an Roth IRA because it is considered a qualified plan distribution. If it is a qualified plan for the distribution why couldn’t I roll it over into another qualified plan (ex IRA)?

  1. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    I am not sure why you have to remove the life insurance from your qualified plan.  However, if you must there are several options available.  You can take a taxable distribution in which income tax would be due on the fair market value of the policy minus the one year term costs.  Another is to purchase the policy for its fair market value.  You can exchange the policy inside the plan for one that is outside the plan.  You can transfer the policy to an insurance trust or surrender the policy.
    Answered on April 25, 2014
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