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CCH® PENSION — 04/27/10

IRS provides interim rules to issuers of variable annuity contracts

The IRS has provided interim guidance to issuers of variable annuity contracts on questions that arise under Code Secs. 807 and 816 as a result of the adoption of Actuarial Guideline XLIII, Commissioners' Annuity Reserve Valuation Methodology (CARVM) for Variable Annuities (AG 43). Generally, for federal tax purposes, the CARVM tax reserve method in effect on the date the contract issued applies to an annuity contact.

The interim guidance provides direction for purposes of (1) determining whether an insurance company satisfies the "50 percent of reserves" test for qualification as a life insurance company for tax years ending on or after December 31, 2009; (2) applying the statutory reserve cap for tax years ending on or after December 31, 2009; and (3) determining the amount of the reserve with respect to a contract falling within the scope of AG 43 and issued on or after December 31, 2009.

Source: IRS Notice 2010-29, I.R.B. 2010-15, April 12, 2010.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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