IRS Issues PLR Confirming Fixed Payments, Funding Asset Status for Indexed Structured Settlements

The IRS has issued a private letter ruling on I.R.C. §§104 and 130 addressing structured settlement annuity contracts with indexed benefits that may fluctuate based on market index performance while maintaining guaranteed minimum payment floors, confirming that periodic payments calculated using an objective formula referencing an index remain fixed and determinable as to amount and time of payment under section 130(c)(2)(A), and that such contracts qualify as funding assets under section 130(d) despite payment variations tied to index performance. [PLR 202621002]

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