IRS Supplements Interest Rate Schedules for Insurance Reserve Computation
Rev. Rul. 2013-4; 2013-9 I.R.B. 520
- Institutional AuthorsInternal Revenue Service
- Code Sections
- Subject Areas/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2013-2257
- Tax Analysts Electronic Citation2013 TNT 22-11
Part I
Section 807. -- Rules for Certain Reserves
For purposes of § 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 2011, 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 2012 and 2013, and a supplement to the table in Part IV of Rev. Rul. 92-19, providing the applicable federal interest rates under § 807(d) for 2012and 2013. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.
This is the twenty-first 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, 1998-1 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. 2001-11, 2001-1 C.B. 780 (2000 and 2001); Rev. Rul. 2002-12, 2002-1 C.B. 624 (2001 and 2002); Rev. Rul. 2003-24, 2003-1 C.B. 557 (2002 and 2003); Rev. Rul. 2004-14, 2004-1 C.B. 511 (2003 and 2004); Rev. Rul. 2005-29, 2005-1 C.B. 1080 (2004 and 2005); Rev. Rul. 2006-25, 2006-1 C.B. 882 (2005 and 2006); Rev. Rul. 2007-10, 2007-1 C.B. 660 (2006 and 2007); Rev. Rul. 2008-19, 2008-1 C.B. 669 (2007 and 2008); Rev. Rul. 2009-3, 2009-1 C.B. 382 (2008 and 2009); Rev. Rul. 2010-7, 2010-1 C.B. 417 (2009 and 2010); Rev. Rul. 2011-23, 2011-43 I.R.B. 585(2010 and 2011); and Rev. Rul. 2012-6, 2012-1 C.B. 349 (2011 and 2012).
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:
Calendar Year of Issue
________________________
Guarantee Duration (years) 2013
_____________________________________________________________________
10 or fewer 3.75**
More than 10 3.75**
but not more than 20
More than 20 3.50**
_____________________________________________________________________
Source: Rates calculated from the monthly averages, ending June 30,
2012, of Moody's Composite Yield on Seasoned Corporate Bonds.
FOOTNOTES TO TABLE
* 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 2013 of 2.16 percent, the valuation interest rate
to be used for this product under §
807 is the applicable rate
specified in this table.
END OF FOOTNOTES TO TABLE
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
_____________________________________________________________________
2012 4.25*
_____________________________________________________________________
Source: Rates calculated from the monthly averages, ending June 30,
2012, 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 TABLE
* As this prevailing state assumed interest rate
exceeds the applicable federal interest rate for 2012 of 2.89
percent, the valuation interest rate of 4.25 percent is to be used
for this product under § 807.
END OF FOOTNOTE TO TABLE
STATUTORY VALUATION INTEREST RATES
BASED ON NAIC STANDARD VALUATION LAW
FOR 2012 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:
Valuation Interest Rate (%)
For Plan Type
Cash Future Guarantee ___________________________
Settlement Interest Duration
Options? Guarantee? (years) A B C
_____________________________________________________________________________
Yes Yes 5 or fewer 4.25* 4.00* 3.75*
More than 5, but 4.25* 4.00* 3.75*
not more than 10
More than 10, but 4.00* 3.75* 3.75*
not more than 20
More than 20 3.75* 3.50* 3.50*
Yes No 5 or fewer 4.25* 4.00* 3.75*
More than 5, but 4.25* 4.00* 3.75*
not more than 10
More than 10, but 4.00* 3.75* 3.75*
not more than 20
More than 20 3.75* 3.50* 3.50*
No Yes 5 or fewer 4.25*
or
No More than 5, but 4.25* NOT
not more than 10 APPLICABLE
More than 10, but 4.00*
not more than 20
More than 20 3.75*
______________________________________________________________________
Source: Rates calculated from the monthly averages, ending June 30, 2012, of
Moody's Composite Yield on Seasoned Corporate Bonds.
FOOTNOTE TO TABLE
* As these rates exceed the applicable federal interest rate for
2012 of 2.89 percent, the valuation interest rate to be used for this product
under § 807 is the applicable rate
specified in the above table.
END OF FOOTNOTE TO TABLE
STATUTORY VALUATION INTEREST RATES
BASED ON NAIC STANDARD VALUATION LAW
FOR 2012 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:
Valuation Interest Rate (%)
For Plan Type
Cash Future Guarantee ___________________________
Settlement Interest Duration
Options? Guarantee? (years) A B C
_____________________________________________________________________________
Yes Yes 5 or fewer 4.50* 4.25* 3.75*
More than 5, but 4.50* 4.25* 3.75*
not more than 10
More than 10, but 4.25* 4.25* 3.75*
not more than 20
More than 20 4.00* 4.00* 3.50*
Yes No 5 or fewer 4.50* 4.50* 4.00*
More than 5, but 4.50* 4.50* 4.00*
not more than 10
More than 10, but 4.25* 4.25* 3.75*
not more than 20
More than 20 4.00* 4.00* 3.75*
____________________________________________________________________
Source: Rates calculated from the monthly averages, ending June 30, 2012, of
Moody's Composite Yield on Seasoned Corporate Bonds.
FOOTNOTE TO TABLE
* As these rates exceed the applicable federal interest rate for
2012 of 2.89 percent, the valuation interest rate to be used for this product
under § 807 is the applicable rate specified in the above table.
END OF FOOTNOTE TO TABLE
Part IV. Applicable Federal Interest Rates.
TABLE OF
APPLICABLE FEDERAL INTEREST RATES
FOR PURPOSES OF § 807
_____________________________________________________________________
Year Interest Rate
_____________________________________________________________________
2012 2.89
2013 2.16
_____________________________________________________________________
Rev. Rul. 2004-106, 2004-2 C.B. 893, for the 2005 rate; Rev.
Rul. 2005-77, 2005-2 C.B. 1071, for the 2006 rate; Rev. Rul. 2006-61,
2006-2 C.B 1028 for the 2007 rate; Rev. Rul. 2007-70, 2007-2 C.B.
1158 for the 2008 rate; Rev. Rul. 2008-53, 2008-2 C.B. 1231 for the
2009 rate; Rev. Rul. 2009-38, 2009-2 C.B. 736 for the 2010 rate; Rev.
Rul. 2010-29, 2010-2 C.B. 818 for the 2011 rate; Rev. Rul. 2011-31,
2011-49 I.R.B. 829 for the 2012 rate; and Rev. Rul. 2012-6, 2012-1
C.B. 349 (2011 and 2012).
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 2012 and 2013 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 Linda K. Boyd 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
- Code Sections
- Subject Areas/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2013-2257
- Tax Analysts Electronic Citation2013 TNT 22-11
