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Does anyone know if collateralizing a fixed or variable annuity to cover a loan causese a taxable event? Thanx

27 May
 
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  1. TaxGuru

    May 27, 2010 at 9:48 am

    Internal Revenue Code section 72(e)(4) provides that a pledge of any portion of the value of an annuity contract to secure a loan is treated as a distribution under the contract. This assumes the contract qualifies for annuity treatment in the first place. Consult a tax advisor for complete information.