life insurance surrender

Forum|Forum|4 years ago
January 8, 2022
6 replies
38 views

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?

Not A Product Question

SweetieJean

Alumni - Champ

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

SweetieJean

Alumni - Champ

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

Carl

Level 11

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.

Mike9241

Level 15

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.

Mike9241

Carl

Level 11

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.