Rev. Rul. 62-137

An organization, such as a corporation, trust, fund or foundation (other than a commercial insurance company), from time to time, enters into agreements to pay life annuities of a specified amount to individuals or to their designees in exchange for money or other property. Held , the annuity contracts issued by such an organization are sufficiently comparable to individual annuity contracts issued by commercial insurance companies to justify the application of a similar standard of valuation to both. See Anna L. Raymond v. Commissioner , 40 B.T.A. 244, affirmed 114 Fed.(2d) 140, certiorari denied, 311 U.S. 710. Accordingly, the annuity rates listed in the table below, which have been selected as representative of the annuity rates currently charged by leading commercial insurance companies for individual contracts, will be used as the standard for valuing currently issued annuities (single life) for Federal tax purposes. It must be realized, however, that the table is subject to change depending upon market conditions. Notice of change will be given by publication in the Internal Revenue Bulletin.

If the agreement provides for an annuity which is not a single life annuity, then appropriate rates, comparable to the single-life rates shown in the table below, shall be used in the valuation. In the case of a completed transaction involving such an annuity, the Commissioner of Internal Revenue, Washington 25, D.C., will furnish the rate to the taxpayer concerned upon request. The request must be accompanied by a statement of the date of birth of each annuitant and by copies of the relevant instruments.

The values prescribed herein will apply even though the annuity contract to be valued (or any other contract) is reinsured or coinsured with a commercial insurance company, unless the agreement provides that all or a specified portion of the annuity obligation has been reinsured by a designated commercial insurance company. In such case, the designated commercial insurance company's individual annuity rate for a comparable contract will be used for the amount of the obligation so reinsured, and the values prescribed herein will apply to any balance of the obligation.

The values prescribed herein will apply for the purpose of determining the aggregate amount of consideration paid for the contract (investment in the contract) for purposes of section 72 of the Internal Revenue Code of 1954.

The provisions of this Revenue Ruling apply to annuity contracts issued by such organizations on or after September 6, 1962, which is 10 days after the date of publication in the Internal Revenue Bulletin. The value of an annuity contract based on any acceptable table prior to the above date will not be changed.

         FAIR MARKET VALUE OF ANNUITIES ISSUED BY ORGANIZATION