Rev. Rul. 55-639

An annuity contract within the meaning of section 402 or 403 of the Internal Revenue Code of 1954 is a contract which provides primarily for periodic installment payments to the annuitant named therein, and under which the death benefits at any time cannot exceed the larger of the reserve or the total premiums paid for the annuity benefits. Thus, in any annuity contract, there is no pure insurance protection at any time. The fact that the contract may provide for return of total premiums paid for the annuity benefits in case of death, and such total premiums may exceed the reserve in the early years, will not be considered as providing insurance protection.

This ruling should not be interpreted as holding that every non-trusteed plan which uses such contracts as a medium of funding and providing benefits is a qualified annuity plan within the meaning of section 403(a) of the Code, nor should it be construed as constituting an approval by the Internal Revenue Service of such a contract. A determination as to whether a particular pension or annuity plan which uses this type of contract constitutes a qualified plan within the meaning of section 401(a) or section 403(a) of the Code can only be made after consideration of all the pertinent facts of the particular case. Request for such a determination should be made in each case by the taxpayer who establishes the plan, or by his authorized representative, to the appropriate office of the District Director of Internal Revenue, in accordance with the procedure outlined in Revenue Ruling 32, C.B. 1953-1, 265