annuity experts out there?

[Belgarath]

Here's a good one! A participant in a 457 plan died. 60 years old. Spouse is sole beneficiary. An insurance agent read that you could roll 457 to IRA now, but didn't realize that you couldn't until 2002. The 457 plan was funded with a deferred annuity.

What they now want is to 1035 exchange the annuity in the 457 plan to a new annuity, in the name of the Trustee of the 457 plan, but with the deceased as annuitant! Then in 2002, the 457 Trustee, acting upon the instructions of the spouse beneficiary, will roll the money to an IRA in the name of the spouse.

I don't have a problem with the second part of the transaction, but how the heck can you do a 1035 exchange when the annuitant is deceased? (The logical approach, to me at least, if the 457 Trustee agrees, is to keep the money there until 2002, then just do a rollover.)

[jlf]

Why doesn't the suviving spouse rollover the funds to her own 457 now? Is that permitted? Then next year she can rollover again to an IRA if she so chooses.

Best wishes,

Joel L. Frank

[Guest gfweis]

In order to be a vailid 1035 exchange the annuitant must be the same before and after the exchange. I would leave the funds as is until next year.