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life insurance surrender

nightcountry — Sat, 08 Jan 2022 16:25:25 GMT

I will be surrendering a life insurance policy with a date of inception in 1992. I found some tax web sites advising that the gains are not taxable if the date of inception is prior to March 31, 2003. I could not find this on the IRS website. So, is this rule still in force, or will I owe taxes on the gains? Can anyone provide a link to the IRS rule?

Re: life insurance surrender

SweetieJean — Sat, 08 Jan 2022 16:36:02 GMT

Can you provide a link to one of the sources that you saw?

Re: life insurance surrender

SweetieJean — Sat, 08 Jan 2022 16:40:45 GMT

I did find one link myself, but it for policies in a foreign country.

Re: life insurance surrender

Carl — Sat, 08 Jan 2022 16:48:07 GMT

If the insurance company sends you a 1099-R or any other type of tax reporting document, then the amount on the document they send you is reportable on your tax return. Weather it's taxable or not is a completely different matter.

Re: life insurance surrender

Mike9241 — Sat, 08 Jan 2022 17:41:58 GMT

taxability of life insurance is governed by IRC 101 and the related regulations.

the section is applicable for proceeds received after 8/16/1954.

you'll have to provide a cite as to 1992

there are special; rules for accelerated death benefits.

Re: life insurance surrender

Carl — Sat, 08 Jan 2022 20:34:07 GMT

Things depend on the type of policy. For example, I used to have a "whole life" policy that included an investment rider. When I cashed out the policy, about $12K of the 50K cash out was investment earnings that were fully taxable. I received a 1099-R for that 12K of earnings too.

Re: life insurance surrender

nightcountry — Sun, 09 Jan 2022 13:09:34 GMT

Here is one link I found.

Surrender Value In Life Insurance & How It's Calculated | PNB MetLife