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Rev. Rul. 2004-14
Rev. Rul. 2004-14, 2004-8 I.R.B. 511
                       Internal Revenue Service (I.R.S.)
                                 Revenue Ruling
                    INSURANCE COMPANIES; INTEREST RATE TABLES
                           Released: January 29, 2004
                          Published: February 23, 2004

 Section 807.--Rules for Certain Reserves

  Insurance companies; interest rate tables. Prevailing state assumed interest rates are provided for the determination of reserves under section 807 of the Code for contracts issued in 2003 and 2004. Rev. Rul. 92-19 supplemented in part.

  Insurance companies; interest rate tables. Prevailing state assumed interest rates are provided for the determination of reserves under section 807 of the Code for contracts issued in 2003 and 2004. Rev. Rul. 92-19 supplemented in part.

  For purposes of s 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 2002, 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 s 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 2003 and 2004, and a supplement to the table in Part IV of Rev. Rul. 92-19, providing the applicable federal interest rates under s 807(d) for 2003 and 2004. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.

  This is the twelfth 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); and Rev. Rul. 2003-24, 2003-1 C.B. 557 (2002 and 2003).

  Part III. Prevailing State Assumed Interest Rates -- Products Issued in Years
                               After 1982. [FN*]
                                   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 2004
10 or fewer                               5.00
More than 10 but not more than 20         4.75 [FNaa1]
More than 20                              4.50 [FNaa1]
Source: Rates calculated from the monthly averages, ending June 30, 2003, of
  Moody's Composite Yield on Seasoned Corporate Bonds (formerly known as
  Moody's Corporate Bond Yield Average -- Monthly Average Corporates).
FNaa1. As the applicable federal interest rate for 2004 of 4.82 percent
  exceeds this prevailing state assumed interest rate, the interest rate to be
  used for this product under s 807 is 4.82 percent.
FN* 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.
                              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
                 2003                                 6.00 [FNa1]
Source: Rates calculated from the monthly averages, ending June 30, 2003, 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.
FNa1. As this prevailing state assumed interest exceeds the applicable
  federal interest rate for 2003 of 5.27 percent, the valuation interest rate
  of 6.00 percent is to be used for this product under s 807.

                           Part III, Schedule C21-2003

   STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW FOR
          2003 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    Guarantee Duration   Valuation Interest Rate For Plan
 Settlement    Interest                                      Type
  Options?    Guarantee?        (years)            A          B          C
Yes           Yes         5 or fewer           6.00       5.25       4.75
                                                            [FNa1]     [FNa1]
                          More than 5, but     5.75       5.25       4.75
                            not more than 10                [FNa1]     [FNa1]
                          More than 10, but    5.50       4.75       4.75
                            not more than 20                [FNa1]     [FNa1]
                          More than 20         4.75       4.25       4.25
                                                 [FNa1]     [FNa1]     [FNa1]
Yes           No          5 or fewer           6.25       5.50       5.00
                                                                       [FNa1]
                          More than 5, but     6.00       5.50       5.00
                            not more than 10                           [FNa1]
                          More than 10, but    5.50       5.00       4.75
                            not more than 20                [FNa1]     [FNa1]
                          More than 20         4.75       4.50       4.50
                                                 [FNa1]     [FNa1]     [FNa1]
No            Yes or No   5 or fewer           6.00
                          More than 5, but     5.75       NOT APPLICABLE
                            not more than 10
                          More than 10, but    5.50
                            not more than 20
                          More than 20         4.75
                                                 [FNa1]
Source: Rates calculated from the monthly averages, ending June 30, 2003, of
  Moody's Composite Yield on Seasoned Corporate Bonds (formerly known as
  Moody's Corporate Bond Yield Average -- Monthly Average Corporates).
FNa1. As the applicable federal interest rate for 2003 of 5.27 percent
  exceeds this prevailing state assumed interest rate, the interest rate to be
  used for this product under s 807 is 5.27 percent.

                           Part III, Schedule D21-2003
   STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW FOR
          2003 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 Duration  Valuation Interest Rate For Plan
 Settlement    Interest                                     Type
  Options?    Guarantee?       (years)            A         B           C
Yes           Yes         5 or fewer          6.50       6.25      5.00 [FNa1]
                          More than 5, but    6.25       6.25      5.00 [FNa1]
                            not more than 10
                          More than 10, but   6.00       5.75      5.25 [FNa1]
                            not more than 20
                          More than 20        5.25       5.25      4.50 [FNa1]
                                                [FNa1]     [FNa1]
Yes           No          5 or fewer          6.75       6.25      5.25 [FNa1]
                          More than 5, but    6.50       6.25      5.25 [FNa1]
                            not more than 10
                          More than 10, but   6.25       6.00      5.00 [FNa1]
                            not more than 20
                          More than 20        5.50       5.50      4.75 [FNa1]
Source: Rates calculated from the monthly averages, ending June 30, 2003, of
  Moody's Composite Yield on Seasoned Corporate Bonds (formerly known as
  Moody's Corporate Bond Yield Average -- Monthly Average Corporates).
FNa1. As the applicable federal interest rate for 2003 of 5.27 percent is
  equal to or exceeds this prevailing state assumed interest rate, the interest
  rate to be used for this product under s 807 is 5.27 percent.

                  Part IV. Applicable Federal Interest Rates.
        TABLE OF APPLICABLE FEDERAL INTEREST RATES FOR PURPOSES OF s 807
Year  Interest Rate
2003   5.27
2004   4.82
  Sources: Rev. Rul. 2002-81, 2002-2 C.B. 928 for the 2003 rate and Rev. Rul. 2003-122, 2003-49 I.R.B. 1179 for the 2004 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 s 807 for certain insurance products issued in 2003 and 2004 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 Ann H. Logan 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).

 Rev. Rul. 2004-14, 2004-8 I.R.B. 511