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Old 10-10-2018, 05:52 PM
dunnigan dunnigan is offline
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Default Section 811(d)

What does this mean?
(d) Method of computing reserves on contract where interest is guaranteed beyond end of taxable year
For purposes of this part (other than section 816), amounts in the nature of interest to be paid or credited under any contract for any period which is computed at a rate which-
(1) exceeds the interest rate in effect under section 808(g)* for the contract for such period, and
(2) is guaranteed beyond the end of the taxable year on which the reserves are being computed,
shall be taken into account in computing the reserves with respect to such contract as if such interest were guaranteed only up to the end of the taxable year.
http://uscode.house.gov/view.xhtml?r...edition=prelim

*The section 808(g) rate is the PSAIR as of the issue date.
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Old 10-11-2018, 09:01 AM
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urysohn urysohn is offline
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Depends which part you're asking about. I believe that's the provision that allows you to get a deduction for dividends payable over the next calendar year (but not beyond), provided that they've been guaranteed to be paid for that time period.

The most recent amendment (when tax reform went in) removed the reference to the tax AFIR in sub-bullet (1) and added the reference to 808(g) instead of using the old language of "prescribed state rate" (basically, incorporating it by reference instead of re-using the term).
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Old 10-11-2018, 09:50 AM
dunnigan dunnigan is offline
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Thanks.

Specifically, I'm asking what are examples of "amounts in the nature of interest to be paid or credited under any contract for any period which is computed at a rate which exceeds" the PSAIR.

Is this referring to payout annuities where benefits were calculated using high rates of interest? Deferred annuities with high guaranteed crediting rates?

What is meant by not taking those amounts into account when computing reserves?
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Old 10-11-2018, 02:01 PM
Steve Grondin Steve Grondin is offline
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Quote:
Originally Posted by dunnigan View Post
Thanks.

Specifically, I'm asking what are examples of "amounts in the nature of interest to be paid or credited under any contract for any period which is computed at a rate which exceeds" the PSAIR.

Is this referring to payout annuities where benefits were calculated using high rates of interest?no -PV(bens) uses AFIRPSAIR, but the bens are the bens, you don't recalc them Deferred annuities with high guaranteed crediting rates?yes

What is meant by not taking those amounts into account when computing reserves?
Note response embedded in quote/ IIRC, CARVM for tax can't use rates in excess of AFIRPSAIR beyond end of taxable year. But I'm rusty, check the book.

Note 2017 law changes AFIR to PSAIR

Last edited by Steve Grondin; 10-11-2018 at 02:08 PM.. Reason: read 811 amendment footnotes
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Old 10-15-2018, 01:01 PM
LowProbability LowProbability is offline
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Quote:
Originally Posted by Steve Grondin View Post
Note response embedded in quote/ IIRC, CARVM for tax can't use rates in excess of AFIRPSAIR beyond end of taxable year. But I'm rusty, check the book.

Note 2017 law changes AFIR to PSAIR
This is correct. For deferred annuities with high guaranteed crediting rates, the projected interest rate in the reserve calculation is capped at the tax valuation rate after the current year.
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