Internal Revenue Service
Revenue Ruling
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smPrevailing state assumed interest rates to be used for determining reserves under Code Sec. 807 were provided for insurance products for 1999 and 2000. Rev Proc 92-19, 1992-1 CB 227, supplemented in part.
Code Sec. 807;
For purposes of section 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 1998, 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 section 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 1999 and 2000, and a supplement to the table in Part IV of Rev. Rul. 92-19, providing the applicable federal interest rate under section 807(d) for 1999 and 2000. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.
This is the eighth 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. 8 (1996 and 1997), Rev. Rul. 98-2, 1998-2 I.R.B. 15 (1997 and 1998), and Rev. Rul. 99-10, 1999-10 I.R.B. 10 (1998 and 1999).
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:
Guarantee Duration
(years) Calendar Year of Issue
------------------ ----------------------
2000
----
10 or fewer 5.00 /**/
More than 10 4.75 /**/
but not more than 20
More than 20 4.50 /**/
Source: Rates calculated from the monthly averages, ending June 30,
1999, of Moody's Corporate Bond Yield Average -- Monthly Average
Corporates.
/*/ 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 the applicable federal interest rate for 2000 of 6.09
percent exceeds this prevailing state assumed interest rate, the
interest rate to be used for this product under 807 is 6.09 percent.
Part III, Schedule B
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
---------------------- -----------------------
1999 6.25 /*/
Source: Rates calculated from the monthly averages, ending June 30,
1999, of 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.
/*/ As this prevailing state assumed interest does not exceed
the applicable federal interest rate for 1999 of 6.30 percent, the
applicable federal interest rate of 6.30 percent is to be used for
this product under 807.
Part III, Schedule C17 - 1999
STATUTORY VALUATION INTEREST RATES
BASED ON NAIC STANDARD VALUATION LAW
FOR 1999 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:
Cash Future Valuation Interest
Rate
Settlement Interest Guarantee For Plan Type
Duration
Options? Guarantee? (years) - A B C
Yes Yes 5 or fewer 6.25 /*/ 5.50 /*/ 5.00 /*/
More than 5,
but not 6.00 /*/ 5.50 /*/ 5.00 /*/
more than 10
More than 10,
but not 5.50 /*/ 5.00 /*/ 4.75 /*/
more than 20
More than 20 4.75 /*/ 4.50 /*/ 4.50 /*/
Yes No 5 or fewer 6.25 4.50 /*/ 5.25 /*/
More than 5,
but not 6.25 /*/ 5.50 /*/ 5.25 /*/
more than 10
More than 10,
but not 5.75 /*/ 5.25 /*/ 5.00 /*/
more than 20
More than 20 5.00 /*/ 4.50 /*/ 4.50 /*/
No Yes or No 5 or fewer 6.25 /*/
More than 5,
but not 6.00 /*/
more than 10 NOT APPLICABLE
More than 10,
but not 5.50 /*/
more than 20
More than 20 4.75 /*/
Source: Rates calculated from the monthly averages, ending June 30,
1999 of Moody's Corporate Bond Yield Average -- Monthly Average
Corporates.
/*/ As the applicable federal interest rate for 1999 of 6.30
percent exceeds this prevailing state assumed interest rate, the
interest rate to be used for this product under 807 is 6.30 percent.
Part III, Schedule D17-1999
STATUTORY VALUATION INTEREST RATE2S
BASED ON NAIC STANDARD VALUATION LAW
FOR 1999 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:
Cash Future Guarantee Valuation Interest Rate
Settlement Interest Duration For Plan Type
Options? Guarantee? (years) A B C
Yes Yes 5 or fewer 6.75 6.25 /*/ 5.25 /*/
More than 5,
but not 6.50 6.25 /*/ 5.25 /*/
more than 10
More than 10,
but not 6.25 /*/ 6.00 /*/ 5.00 /*/
more than 20
More than 20 5.50 /*/ 5.50 /*/ 4.50 /*/
Yes No 5 or fewer 7.00 6.50 5.50 /*/
More than 5,
but not 6.75 6.50 5.50 /*/
more than 10
More than 10,
but not 6.25 /*/ 6.25 /*/ 5.25 /*/
more than 20
More than 20 5.50 /*/ 5.50 /*/ 4.75 /*/
Source: Rates calculated from the monthly averages, ending June 30,
1999, of Moody's Corporate Bond Yield Average -- Monthly Average
Corporates.
/*/ As the applicable federal interest rate for 1999 of 6.30
percent exceeds this prevailing state assumed interest rate, the
interest rate to be used for this product under 807 is 6.30 percent.
Part IV. Applicable Federal Interest Rates.
TABLE OF APPLICABLE FEDERAL INTEREST RATES FOR PURPOSES OF 807 Year Interest Rate ---- ------------- 1999 6.30 2000 6.09 Sources: Rev. Rul. 98-57, 1998-49 I.R.B. 4 for the 1999 rate and Rev. Rul. 99-48, 1999-49 I.R.B. 600 for the 2000 rate. 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 1999 and 2000 and is further supplemented by an addition to the table in Part IV of Rev. Rul.