Taxes and your advisor

Secondary market annuities and taxes

We are going to be direct about this one: Pacific Structured Assets does not provide tax advice, and we do not give guidance on how these assets are taxed. The treatment depends on your own circumstances and on questions that call for a professional. Bring it to your tax advisor, and we will give them everything they need.

Why we do not spell out the tax treatment

These are specialized assets, and how their income is treated for tax purposes turns on facts specific to you: your situation, how you title and hold the asset, and the account it sits in. Some aspects of the tax treatment for a buyer are genuinely nuanced. Rather than hand you a general answer that may not fit your circumstances, we would rather you get a definitive one from a professional who knows your full picture.

Pacific Structured Assets is not a tax advisor and is not registered to give tax, legal, or accounting advice. What we can do is give your advisor a complete and accurate picture of any deal so they can evaluate it for you.

What to bring to your tax advisor

If you want your advisor to weigh in before you invest, these are the things that let them do it properly:

The listing's full payment schedule, purchase price, and estimated effective yield.
The closing and assignment documents, and the court order for the transfer.
How you intend to hold the asset: individually, jointly, through a trust or an LLC, or in a self-directed IRA.
Your broader tax situation, which only you and your advisor can see.

Many investors hold these in a self-directed IRA. Whether that is right for you, and what it means for your taxes, is part of the same conversation with your advisor.

Questions, answered plainly

Does Pacific Structured Assets advise on how these are taxed?

No. Pacific Structured Assets does not provide tax, legal, or accounting advice. The tax treatment of a secondary market annuity payment stream depends on your specific circumstances and how you hold the asset, and it is a question to review with your own tax advisor before you invest.

What should I give my tax advisor to evaluate a deal?

The listing's full payment schedule and purchase price, the closing and assignment documents, and how you plan to hold the asset (individually, jointly, through a trust or an LLC, or in a self-directed IRA). With those in hand, your advisor can evaluate the treatment for your situation.

Can I hold one in a self-directed IRA?

Often, yes, where the issuing carrier permits IRA titling, using a custodian that accepts alternative assets. Whether that fits you, and how it affects your taxes, is a question for your own tax advisor and IRA custodian, not something we advise on.

This is not tax advice. Pacific Structured Assets does not provide tax, legal, or accounting advice, and nothing on this page is a statement of how any asset will be taxed to you. Consult your own tax advisor before you invest.

What these assets are, and what they are not

Guaranteed and life-contingent structured settlement payment rights, and lottery payment rights, represent the right to receive factored payments that Pacific Structured Assets purchases and assigns to investors through a court-approved process. They are purchased at a discount to their total scheduled payments.

These payment rights are NOT annuities, NOT insurance products, and NOT securities registered with the U.S. Securities and Exchange Commission. They are not bank deposits, are not FDIC-insured, and are not protected by any state insurance guaranty association. The industry term “secondary market annuity” refers to these payment rights and does not mean you are purchasing an insurance annuity contract.

You acquire the right to receive the payments, not the underlying annuity. The annuity itself does not change hands. Unlike the original structured settlement annuity, which may be shielded from creditors under applicable law, the assigned payment rights you purchase generally do not carry that creditor or bankruptcy protection.

Assigned annuities, offered as a separate product line, are existing insurance annuity contracts reassigned to a new owner through a change of ownership or an irrevocable change of payee.

These are long-term holdings with limited liquidity, and may not be suitable for every investor. There is no public trading market and no daily price. Resale or reassignment of a payment stream to another buyer may be possible, and Pacific Structured Assets can assist, but a resale is not guaranteed and the price it would bring is not guaranteed. Because the payments are fixed, that resale value moves with prevailing interest rates: an investor could realize a gain if rates have fallen since purchase, or a loss if rates have risen. These holdings are best suited to capital an investor can commit for the long term. Nothing on this website is tax, legal, financial, or investment advice. Consult your own advisors before investing.

Pacific Structured Assets, Inc. does not provide tax, legal, financial or accounting advice. The material on this website has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. You should consult your own tax, legal, financial or accounting advisors before engaging in any transaction, including the acquisition of factored structured settlement payments. Pacific Structured Assets is not registered with the Securities and Exchange Commission and is not licensed to sell insurance in any state.

Pacific Structured Assets

We will give your advisor everything they need.

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