Sec. 201. Qualifying longevity annuity contracts
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Not later than the date which is 1 year after the date of the enactment of this Act, the Secretary of the Treasury shall amend the regulation issued by the Department of the Treasury relating to Longevity Annuity Contracts (79 Fed. Reg. 37633 (July 2, 2014)), as follows: The Secretary shall amend Q&A–17(b)(3) of Treas. Reg. section 1.401(a)(9)–6 and Q&A–12(b)(3) of Treas. Reg. section 1.408–8 to eliminate the requirement that premiums for qualifying longevity annuity contracts be limited to 25 percent of an individual’s account balance, and to make such corresponding changes to the regulations and related forms as are necessary to reflect the elimination of this requirement.
The Secretary shall amend Q&A–17(b)(2)(i) of Treas. Reg. section 1.401(a)(9)–6 and Q&A–12(b)(2)(i) of Treas. Reg. section 1.408–8 to increase the dollar limitation on premiums for qualifying longevity annuity contracts from $125,000 to $200,000, and to make such corresponding changes to the regulations and related forms as are necessary to reflect this increase in the dollar limitation. The Secretary shall amend Q&A–17(d)(2)(i) of Treas. Reg. section 1.401(a)(9)–6 to provide that, in the case of calendar years beginning on or after January 1 of the second year following the year of enactment of this Act, the $200,000 dollar limitation (as increased by subparagraph (A)) will be adjusted at the same time and in the same manner as the limits are adjusted under section 415(d) of the Internal Revenue Code of 1986, except that the base period shall be the calendar quarter beginning July 1 of the year of enactment of this Act, and any increase to such dollar limitation which is not a multiple of $10,000 will be rounded to the next lowest multiple of $10,000.
The Secretary shall amend Q&A–17(c) of Treas. Reg. section 1.401(a)(9)–6, and make such corresponding changes to the regulations and related forms as are necessary, to provide that, in the case of a qualifying longevity annuity contract which was purchased with joint and survivor annuity benefits for the individual and the individual's spouse which were permissible under the regulations at the time the contract was originally purchased, a divorce occurring after the original purchase and before the annuity payments commence under the contract will not affect the permissibility of the joint and survivor annuity benefits or other benefits under the contract, or require any adjustment to the amount or duration of benefits payable under the contract, provided that any qualified domestic relations order (within the meaning of section 414(p) of the Internal Revenue Code of 1986) or any divorce or separation instrument (within the meaning of section 71(b)(2) of the Internal Revenue Code of 1986)— provides that the former spouse is entitled to the survivor benefits under the contract; does not modify the treatment of the former spouse as the beneficiary under the contract who is entitled to the survivor benefits; or does not modify the treatment of the former spouse as the measuring life for the survivor benefits under the contract.
The Secretary shall amend Q&A–17(a)(4) of Treas. Reg. section 1.401(a)(9)–6 to ensure that such Q&A does not preclude a contract from including a provision under which an employee may rescind the purchase of the contract within a period not exceeding 90 days from the date of purchase. The Secretary shall amend Q&A–17(d)(4) of Treas. Reg. section 1.401(a)(9)–6, and make such corresponding changes to the regulations and related forms as are necessary, to provide that an annuity contract is not treated as a contract described in such Q&A–17(a)(7) to the extent that the contract— either— is a variable contract under section 817(d) of the Internal Revenue Code of 1986; or is an indexed contract; provides for the possibility of annuity payment increases (but not decreases) based on the investment return and market value of 1 or more segregated asset accounts (in the case of a variable contract) or based on the performance of 1 or more specified indexes (in the case of an indexed contract); provides for a guaranteed minimum level of annuity payments irrespective of such investment return, market value, or performance; and in the event of death before the annuity starting date, provides that any death benefit that is payable in a lump sum is equal to the premiums paid, without reduction for investment return, market value, index performance, surrender charges, market value adjustments, or any other amounts.
For purposes of the preceding sentence, a downward adjustment to the dollar amount of annuity payments shall not be treated as an impermissible reduction in such payments, provided that the adjustment is made to reflect a change in annuitant that is required or permitted under the Internal Revenue Code of 1986 or regulations and the adjustment is based on reasonable actuarial assumptions. Paragraphs (1), (2), and
(5)of subsection
(a)shall be effective with respect to contracts purchased or received in an exchange on or after the date of the enactment of this Act. Paragraphs
(3)and
(4)of subsection
(a)shall be effective with respect to contracts purchased or received in an exchange on or after July 2, 2014. Prior to the date on which the Secretary of the Treasury issues final regulations pursuant to subsection (a)— the Secretary shall administer and enforce the law in accordance with subsection
(a)and the effective dates in paragraph
(1)of this subsection; and taxpayers may rely upon their reasonable good faith interpretations of subsection (a).
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Sec. 201
Qualifying longevity annuity contracts
Fed. Reg.79 FR 37633
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