This is a LI issue for me currently, but I feel this thread is more appropriate for this forum.
Honestly, If its an amount under 500K, I think its rediculous for a company to take longer than 10 or 12 business days to 1035 funds...MAX!!
I understand having to close positions or capitalize the companies general account properly before transfering, but companies should hav amounts under 500K ready to go almost immediately...wouldnt you think?? I also realize that stalling is often used so an agent can call and try to save the business. Thats the end of my rant..on to my questions:
1.Whats the most effective way you have found to get a company off their asses and transfer the funds??
2.Has anyone ever had a company require a client to send a seperate letter writen by the client stating that they want to transfer the funds? I have had companies call them to confirm before. The kicker is that they never informed the recieving company or the client of this so called "requirement" until the client called to complain! Their reason behind this was that the 1035 forms where signed over 2 months ago and it was against their policy to transfer funds that had been requested over two months ago.....IT WAS A LIFE POLICY...IT WAS IN UNDERWRITTING....THEY HAD TO PULL 5 APS REPORTS...3 THAT THE CLIENT DIDNT TELL ME ABOUT!!!
I realize that its totally normal for 1035 departments to recieve forms that where signed a month or two ago. And I know that this is most likely just a stalling tactic. My client is so pissed that he wants to file a complaint against the transfering company with the state doi & finra!!! He also has annuities with that company and wants to move them now too, regardless of surrender charges...lol.
Im pissed because its a big case and im waiting to get paid...lol.
I had Lincoln Financial take 4-months on one this year.
Had a Met Life case where the client surrendered one policy for cash and 1035ed the 2nd one. Did both on the same day.
They had the surrendered policy check within 5-days. The 1035 policy check did not go out for 10-weeks.
They all drag their feet.
10 weeks!!??? Wow. I feel a bit better about this case after hearing that! Dont they only have 30 days...or 45...or 60...or something like that, to send the 1035 check to the recieving company? Or is that a state specific regulation??
Draft up your own conservation letter and submit it with the 1035 form to the ceding company.
You can type up a letter from the client stating that they would like the 1035 expedited, and they would like to "waive the conservation efforts." .
Believe me; every company has one.
I have seen some 1035's that have come over in less than 10 days.
Give me a call if you would like. I hope this helps......
"Conservation efforts"? wow, im still learning new terms every week in this industry...but thats a good thing, lol. But it makes sense. Sending your own conservation letter is great advice though, thanks. This will now be a regular stock letter for my assistant to send with future 1035s! thanks!
So internaly on a corporate level; is the period of conservation efforts more of a soft number for the company, or is it a hard number set in the business model, that they follow unless pushed to do otherwise?
Are there not state or federal laws dictating the maximum time for a 1035 after papers are submited? I thought it was 30 days? I know insurance regulations vary from state to state, but it seems like 1035 regulations would be made more at the federal level with finra...
I don't think there is a limit on a 1035 exchange, other than acting in the clients best interest.
In some cases, where the original funds are can cause a significant delay. For instance, try 1035'ing out of a real estate investment. It may take a bit, frequently either until the property is sold or another investor is found.
Also, having funds on hand is irrelevant. They need the funds that represent that clients account. The positions need to be closed, whereever the money is.
I think some companies are getting more dilligent about sending out "thier own" transfer paperwork to be signed by the customer. That can slow the process, in addition some companies wont talk to the company, stating the customer must call for info. In the past I have always had my copies of the more common carriers being transferred from and it seems the companies are changing them up or not accepting those, and waiting for thier original to comeback.
On another note am seeing MF's getting transferred over quicker then ever 1-3 days on few recently.
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JDS- what do you mean 1035 out of a real estate innvestment can be delayed, what sort of "life type" policy is invested heavily in real estate.
I thought real estate was 1031 exchange.
Last edited by HarryRenard : 10-25-2009 at 12:05 AM.
Reason: Posts merged
JDS- what do you mean 1035 out of a real estate innvestment can be delayed, what sort of "life type" policy is invested heavily in real estate.
I thought real estate was 1031 exchange.
To be honest, I've never ran into this with a life 1035 exchange. I did get a bit off topic.
I read a personal experience into the original post, but that had nothing to do with a life policy.
YEs I usaully I make copies of what my customers recieve so I have reference.
Thats a good idea about calling but so many fmo/imo's have online form archive basicly available to the world so 9 time out of 10 I can get it but sometime it just doesnt work, but what I just ran into was Great American did not except the form I sent in early they waited for the one they sent out to come back (i geuss I sent it a little to early) which was the same . They are always a pain to get money away from.
You can also visit many companies websites to acquire their proprietary 1035 paperwork.
You can always call the ceding company and ask them to fax or email their paperwork to you.
Please be advised that you must be clever while having this conversation........
I always try to have a 3 way call with the client and surrendering company before heading out to an appointment like this to find out what the company is going to require and to get paperwork emailed or faxed....I've recently run across a company that faxed me paperwork required it be signature guranteed and then rejected the paperwork because they require their paperwork to be original and because they faxed it to me it was no longer original...interesteing the csr didn't mention that one up front.
YEs I usaully I make copies of what my customers recieve so I have reference.
Thats a good idea about calling but so many fmo/imo's have online form archive basicly available to the world so 9 time out of 10 I can get it but sometime it just doesnt work, but what I just ran into was Great American did not except the form I sent in early they waited for the one they sent out to come back (i geuss I sent it a little to early) which was the same . They are always a pain to get money away from.
Does the surrender of the Great American policy even create a taxable event?
They can just cash surrender the policy if they aren't going to have to pay taxes anyway. Just do a replacement form and it will be a lot quicker.
It was an annuity I was 1035ing so yes it was a taxable situation, it was a National Health annuity which is now great american.
Norway Guy- If they faxed a form to you and then you have it signed and MAIL it back that is an Original. Signatures are original not forms. But having said that these companies tend to say and do a lot when they dont want to transfer $$$$$.
Lol. sucky, but funny. Thanks for the story, from now on I'll ask for pdf's.
Originally Posted by Norwayguy
I always try to have a 3 way call with the client and surrendering company before heading out to an appointment like this to find out what the company is going to require and to get paperwork emailed or faxed....I've recently run across a company that faxed me paperwork required it be signature guranteed and then rejected the paperwork because they require their paperwork to be original and because they faxed it to me it was no longer original...interesteing the csr didn't mention that one up front.
It was an annuity I was 1035ing so yes it was a taxable situation, it was a National Health annuity which is now great american.
Norway Guy- If they faxed a form to you and then you have it signed and MAIL it back that is an Original. Signatures are original not forms. But having said that these companies tend to say and do a lot when they dont want to transfer $$$$$.
Equitable at least for a time would fax you forms but they would refuse to accept the completed form because they required you to use their original form which was green in color it was a joke because they would fax or email the form to you all day long and then refuse to accept it because it was not their original form....
The worst part is, the companies can drag their feet. The stipulation is they have to transfer the money within 180 days after receiving the transfer request.
Still, these companies that hold onto the money for 3 months is downright criminal. Especially when the client may be paying a surrender charge to them on top of that wait.
One wonder if it will take some litigation to get insurance companies moving on 1035 exchanges - especially those that involve variable accounts. Just a couple of days can cause massive losses.
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A.M. Hyers
Hyers and Associates, Inc.
If I am moving a variable (annuity) account or even MF's (brokerage accounts) I have always called with the customer to move the money to a money market or a stable account to preserve the account from any additional losses.
But I almost always find variable accounts to transfer a little quicker as long as the paperwork is clean (which is a given).
If I am moving a variable (annuity) account or even MF's (brokerage accounts) I have always called with the customer to move the money to a money market or a stable account to preserve the account from any additional losses.
But I almost always find variable accounts to transfer a little quicker as long as the paperwork is clean (which is a given).
Yes, I have always found that variable products transfer a bit quicker. And I have started doing the MM thing lately too.
Just an update on the original post. After my client faxed in a letter demanding them to transfer the funds, they had it done in 3 business days. I think that if the client directly requests that it me moved immediately, by law they have to act in an efficient and timely manner...part of the whole fiduciary responsibility thing...
I also learned that the managing partner of the office the business was written at has the say to sit on the money to try to save the business....
For now on my 1035s will have a singed letter by the client stating that they want the conservation effort waived.
1035 Issues
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