Rev. Proc. 71-6

Section 1. Purpose

The purpose of this Revenue Procedure is to set forth tables, based on interest at 3 1/2 percent, to be used in appropriate cases for the valuation of temporary survivor annuities payable under the Civil Services Retirement System to the eligible surviving children of its deceased members.

Sec. 2. Background

As part of a larger computation, the present value of a temporary survivor annuity payable under the Civil Service Retirement Act to the eligible child of a deceased member of the Civil Service Retirement System may be required to determine the amount of the death benefit exclusion allowable under section 101(b) of the Internal Revenue Code of 1954, relating to employees' death benefits. See section 1.101-2(e) of the Income Tax Regulations. The present value of such an annuity may also be required, as part of a larger computation, to determine the amount excludable from the gross estate for Federal estate tax purposes under section 2039(c) of the Code, relating to the exemption of annuities under certain qualified trusts and plans. See section 20.2039-2(c)(2) of the Estate Tax Regulations.

For the period prior to October 12, 1962, the law provided that to be eligible for a survivor annuity, the child must be unmarried and under 18. For the period October 12, 1962 through July 17, 1966, the law was amended to provide that an unmarried child who is a student (that is, in regular full-time attendance at a high school, trade school, technical or vocational institute, junior college, college, university, or comparable recognized educational institution) between ages 18 and 21 may also be eligible. Effective on and after July 18, 1966, a later amendment substituted age 22 for age 21. Thus, it may be required to determine the present value of an annuity to age 18, 21, or 22, depending on the valuation date and the facts of the particular case.

Sec. 3. Relationship to Other Tables

Whenever the present value is to be determined on the basis of U.S. Life Table 38 with interest at 31/2 percent, the tables set forth in section 5 may be used. As to the basis applicable in a particular case, see section 20.2031-7 of the Estate Tax Regulations.

Example 9 of the pamphlet "Actuarial Values for Estate and Gift Tax," Internal Revenue Service Publication 11, shows a formula for the computation of a temporary life annuity for a term that is a whole number of years, but not for a term of years and months. The tables set forth in section 5 show the same factors for terms of a whole number of years that are obtained by following the instructions in Example 9. In addition, they show factors interpolated for terms of years and months.

Sec. 4. Use of Tables VI, VII, and VIII

Use Table VI if the annuity ceases at age 18. Select the factor from Table VI that is opposite the age of the child on the valuation date. Multiply such factor by the annual amount of the annuity. Finally, multiply the result by 1.0159 to adjust from an annual to a monthly payment basis.

Example. The factor in Table VI opposite age 2 years and 5 months is 11.7400. Hence the present value of an annuity of $10 a month payable to a person aged 2 years, 5 months, until he attains age 18 or dies under that age is $120 X 11.7400 X 1.0159 (factor for monthly payments) or $1,431.20.

Use Table VII if the annuity ceases at age 21 and Table VIII if the annuity ceases at age 22.

Example. The factor in Table VIII opposite age 2 years and 5 months is 13.8413. Hence the present value of an annuity of $10 a month payable to a person aged 2 years, 5 months, while he is living and under the age of 22 is $120.00 X 13.8413 X 1.0159 (factor for monthly payments) or $1,687.37.

Sec. 5. Tables VI, VII, and VIII

                               Table  VI