IRS PLR: Tax Treatment of Planned Contingent Deferred Annuity Contract (IRC §72)

The IRS has published a private letter ruling on Section 72 concerning a life insurance company’s planned issuance of contingent deferred annuity contract’s to, or for the benefit of, individuals. The IRS determined that: 1) the contract will be treated as an annuity contract under Section 72; 2) the guarantee payments will be taxable as “amounts received as an annuity” under Section 72(b); 3) the account will not cause the contract to have a “cash value” or “cash surrender value” for purposes of Section 72, and will not otherwise be part of the contract for federal tax purposes; and 4) ...