Description: This article outlines the IRS directive published in July 2014, which provides a safe harbor treatment for variable annuity hedging gains and losses relating to VA contracts issued before Dec. 31, 2009.

Description: Provides in-depth discussion of IRS Rev. Proc. 2008-24, including tax background of partial annuity exchanges. Then discusses partial annuitizations and “modified endowment contracts.”

Description: Reserves for Annuity Contracts that Flunk Section 72(s) Can be Deductible

Description: The article summarizes PLRs 201515001 and 201519001, in which the IRS addressed the treatment of a non-qualified deferred annuity contract under the investor control doctrine and other applicable rules. The contract provides a guaranteed lifetime withdrawal benefit and investment options that correspond to “public” mutual funds. The IRS concluded that the investor control doctrine will apply to treat the contract purchaser as the owner of the mutual fund shares for federal income tax purposes. The IRS also addressed certain other tax aspects of the arrangement. The effect of the rulings is that the contract will be taxed similarly to a contingent deferred annuity (where the policyholder holds the mutual fund shares in his or her own brokerage account), while being structured like a traditional deferred variable annuity (where the insurance company holds the shares in its separate account).

Description: Owners of nonqualified annuity contracts, individuals under qualified retirement plans, and annuity issuers are left without any published guidance on when annuity payments can be used to satisfy the SEPP [Substantially Equal Periodic Payments] exceptions to the 10 percent penalty tax under sections 72q2D and 72t2Aiv. This article discusses that problem. The insurance industry requested guidance on this issue.8

Description: The United States district court for the Southern District of Ohio recently issued its opinion in American Financial Group and Consolidated Subsidiaries v. United States. The issue in the case as framed by the Internal Revenue Service IRS was whether Actuarial Guideline XXXIII AG 33 applies retroactively or prospectively to the calculation of reserves for deferred annuity contracts. This article is a discussion of this opinion.

Description: This is an article about how to place value on an annuity benefit.

Description: The article discusses PLR 201632004, which addresses the partial annuitization rules of IRC section 72(a)(2) in the context of a deferred income annuity rider attached to a variable deferred annuity contract.

Description: Summary of Administration's FY 2023 Tax Proposals of Interest to Life Insurers

Description: In September 2009, the Internal Revenue Service IRS released a private letter ruling PLR 200939018 June 18, 2009 addressing a contract in which the right to receive annuity payments and otherwise access a contract’s cash value is contingent upon the annuitant living to a specified age. The ruling holds that the contract is an annuity contract for purposes of section 72 of the Code. This article reviews the specifics of the ruling.