IRS Supplements Interest Rate Schedules For Insurance Reserve Computation.
Rev. Rul. 2005-29; 2005-1 C.B. 1080
- Institutional AuthorsInternal Revenue Service
- Cross-ReferencePart I
- Code Sections
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- LanguageEnglish
- Tax Analysts Document NumberDoc 2005-10407
- Tax Analysts Electronic Citation2005 TNT 92-10
Rev. Rul. 2005-29
For purposes of § 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 2003, this ruling supplements the schedules of prevailing state assumed interest rates set forth in Rev. Rul. 92-19, 1992-1 C.B. 227. This information is to be used by insurance companies in computing their reserves for (1) life insurance and supplementary total and permanent disability benefits, (2) individual annuities and pure endowments, and (3) group annuities and pure endowments. As § 807(d)(2)(B) requires that the interest rate used to compute these reserves be the greater of (1) the applicable federal interest rate, or (2) the prevailing state assumed interest rate, the table of applicable federal interest rates in Rev. Rul. 92-19 is also supplemented.
Following are supplements to schedules A, B, C, and D to Part III of Rev. Rul. 92-19, providing prevailing state assumed interest rates for insurance products with different features issued in 2004 and 2005, and a supplement to the table in Part IV of Rev. Rul. 92-19, providing the applicable federal interest rates under § 807(d) for 2004 and 2005. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.
This is the thirteenth supplement to the interest rates provided in Rev. Rul. 92-19. Earlier supplements were published in Rev. Rul. 93-58, 1993-2 C.B. 241 (interest rates for insurance products issued in 1992 and 1993); Rev. Rul. 94-11, 1994-1 C.B. 196 (1993 and 1994); Rev. Rul. 95-4, 1995-1 C.B. 141 (1994 and 1995); Rev. Rul. 96-2, 1996-1 C.B. 141 (1995 and 1996); Rev. Rul. 97-2, 1997-1 C.B. 134 (1996 and 1997); Rev. Rul. 98-2, 1998-2 C.B. 259 (1997 and 1998); Rev. Rul. 99-10, 1999-1 C.B. 671 (1998 and 1999); Rev. Rul. 2000-17, 2000-1 C.B. 842 (1999 and 2000); Rev. Rul. 2001-1, 2001-1 C.B. 780 (2000 and 2001); Rev. Rul. 2002-12, 2002-1 C.B. 624 (2001 and 2002); Rev. Rul. 2003-24, 2003-10 I.R.B. 557 (2002 and 2003); and Rev. Rul. 2004-14, 2004-8 I.R.B. 511 (2003 and 2004).
Part III. Prevailing State Assumed Interest Rates -- Products Issued in Years After 1982.*
Schedule A
STATUTORY VALUATION INTEREST RATES
BASED ON THE 1980 AMENDMENTS TO THE
NAIC STANDARD VALUATION LAW
A. Life insurance valuation:
Guarantee Duration
(years) Calendar Year of Issue
__________________ ______________________
2005
10 or fewer 5.00**
More than 10 4.75**
but not more than 20
More than 20 4.50**
Source: Rates calculated from the monthly averages, ending June
30, 2004, of Moody's Composite Yield on Seasoned Corporate Bonds.
FOOTNOTES TO SCHEDULE A
* The terms used in the schedules in this ruling and in
Part III of Rev. Rul. 92-19 are those used in the Standard Valuation
Law; the terms are defined in Rev. Rul. 92-19.
** As these rates exceed the applicable federal
interest rate for 2005 of 4.44 percent, the interest rate to be used
for this product under § 807 are those specified in this table.
END OF FOOTNOTES TO SCHEDULE A
Part III, Schedule B
STATUTORY VALUATION INTEREST RATES
BASED ON THE 1980 AMENDMENTS TO THE
NAIC STANDARD VALUATION LAW
B. Single premium immediate annuities and annuity benefits involving
life contingencies arising from other annuities with cash settlement
options and from guaranteed interest contracts with cash settlement
options:
Calendar Year of Issue Valuation Interest Rate
______________________ _______________________
2004 5.50*
Source: Rates calculated from the monthly averages, ending June 30,
2004, of Moody's Composite Yield on Seasoned Corporate Bonds
(formerly known as Moody's Corporate Bond Yield Average -- Monthly
Average Corporates). The terms used in this schedule are those used
in the Standard Valuation Law as defined in
Rev. Rul. 92-19.
FOOTNOTE TO SCHEDULE B
* As this prevailing state assumed interest exceeds the
applicable federal interest rate for 2004 of 4.82 percent, the
valuation interest rate of 5.50 percent is to be used for this
product under § 807.
END OF FOOTNOTE TO SCHEDULE B
Part III, Schedule C22 -- 2004
STATUTORY VALUATION INTEREST RATES
BASED ON NAIC STANDARD VALUATION LAW
FOR 2004 CALENDAR YEAR BUSINESS
GOVERNED BY THE 1980 AMENDMENTS
C. Valuation interest rates for other annuities and guaranteed
interest contracts that are valued on an issue year basis:
Cash Future Guarantee Valuation Interest Rate
Settlement Interest Duration For Plan Type
Options? Guarantee? (years) A B C
__________ __________ ___________ _______________________
Yes Yes 5 or fewer 5.50 5.00 4.75*
More than 5, but not 5.50 5.00 4.75*
more than 10
More than 10, but not 5.00 4.75* 4.50*
more than 20
More than 20 4.50* 4.25* 4.25*
Yes No 5 or fewer 5.75 5.00 4.75*
More than 5, but not 5.50 5.00 4.75*
more than 10
More than 10, but not 5.25 4.75* 4.75*
more than 20
More than 20 4.75* 4.25* 4.25*
No Yes or No 5 or fewer 5.50
More than 5, but not 5.50 NOT
more than 10 APPLICABLE
More than 10, but not 5.00
more than 20
More than 20 4.50*
Source: Rates calculated from the monthly averages, ending June 30,
2004, of Moody's Composite Yield on Seasoned Corporate Bonds.
FOOTNOTE SCHEDULE C22
* As the applicable federal interest rate for 2004 of
4.82 percent exceeds this prevailing state assumed interest rate, the
interest rate to be used for this product under § 807 is 4.82
percent.
END OF FOOTNOTE TO SCHEDULE C22
Part III, Schedule D22 -- 2004
STATUTORY VALUATION INTEREST RATES
BASED ON NAIC STANDARD VALUATION LAW
FOR 2004 CALENDAR YEAR BUSINESS
GOVERNED BY THE 1980 AMENDMENTS
D. Valuation interest rates for other annuities and guaranteed
interest contracts that are contracts with cash settlement options
and that are valued on a change in fund basis:
Cash Future Guarantee Valuation Interest Rate
Settlement Interest Duration For Plan Type
Options? Guarantee? (years) A B C
__________ __________ ___________ _______________________
Yes Yes 5 or fewer 6.00 5.75 4.75*
More than 5, but not 6.00 5.75 4.75*
more than 10
More than 10, but not 5.50 5.50 4.75*
more than 20
More than 20 5.00 5.00 4.25*
Yes No 5 or fewer 6.25 6.00 5.00
More than 5, but not 6.00 6.00 5.00
more than 10
More than 10, but not 5.75 5.50 4.75*
more than 20
More than 20 5.00 5.00 4.50*
Source: Rates calculated from the monthly averages, ending June 30,
2004, of Moody's Composite Yield on Seasoned Corporate Bonds.
FOOTNOTE TO SCHEDULE D22
* As the applicable federal interest rate for 2004 of
4.82 percent is equal to or exceeds this prevailing state assumed
interest rate, the interest rate to be used for this product under
§ 807 is 4.82 percent.
END OF FOOTNOTE TO SCHEDULE D22
Part IV. Applicable Federal Interest Rates.
TABLE OF
APPLICABLE FEDERAL INTEREST RATES
FOR PURPOSES OF § 807
Year Interest Rate
____ _____________
2004 4.82
2005 4.44
Sources: Rev. Rul. 2003-122,
2003-49 I.R.B. 1179 for the 2004 rate
and Rev. Rul. 2004-106,
2004-49 I.R.B. 893.
EFFECT ON OTHER REVENUE RULINGS
Rev. Rul. 92-19 is supplemented by the addition to Part III of that ruling of prevailing state assumed interest rates under § 807 for certain insurance products issued in 2003 and 2004 and is further supplemented by an addition to the table in Part IV of Rev. Rul. 92-19 listing applicable federal interest rates. Parts I and II of Rev. Rul. 92-19 are not affected by this ruling.
DRAFTING INFORMATION
The principal author of this revenue ruling is Ann H. Logan of the Office of Associate Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling contact her at (202) 622-3970 (not a toll-free call).
- Institutional AuthorsInternal Revenue Service
- Cross-ReferencePart I
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2005-10407
- Tax Analysts Electronic Citation2005 TNT 92-10
