IRC Section 807: Large Business and International (LB&I) Directive Related to Principle Based Reserves for Variable Annuity Contracts (AG 43/VM-21) and Life Insurance Contracts VM-20)

 

August 24, 2018

Control Number: LB&I-04-0818-015

       Affected IRM: IRM 4.51.2                      

MEMORANDUM FOR LARGE BUSINESS AND INTERNATIONAL DIVISION PRACTICE AREA DIRECTORS

FROM:
Douglas W. O’Donnell /s/ Douglas W. O’Donnell
Commissioner, Large Business and International Division

SUBJECT:
IRC Section 807: Large Business and International (LB&I)
Directive Related to Principle Based Reserves for Variable
Annuity Contracts (AG 43/VM-21) and Life Insurance Contracts
(VM-20) 

This Directive provides that LB&I examiners should not challenge an insurance company’s determination of tax reserves for certain variable annuity contracts and certain life insurance contracts, if the insurance company reports its tax reserves for 2017 in compliance with this Directive. 

The scope of this Directive is limited to (i) variable annuity contracts subject to the reserve method in Actuarial Guideline XLIII (AG 43) and Valuation Manual, part 21 (VM-21) for statutory accounting purposes and (ii) life insurance contracts subject to the reserve method in Valuation Manual, part 20 (VM-20) for statutory accounting purposes and for which the insurance company implemented VM-20 in 2017.

If an insurance company does not satisfy the requirements of this Directive for such variable annuity and life insurance contracts, regular audit procedures apply. 

This Directive is not an official pronouncement of law, and cannot be used, cited, or relied upon as such. In addition, except as otherwise specifically provided herein, nothing in this Directive should be construed as affecting the operation of any other provision of the Internal Revenue Code, regulations or guidance thereunder. No inferences should be drawn from this Directive that any deduction is allowed for asset adequacy reserves or deficiency reserves. 

Background:

Insurance companies are generally required, by state law, to file annual statements using statutory accounting principles set by the National Association of Insurance Commissioners (NAIC) as adopted by state insurance regulators. The Standard Valuation Law, which was promulgated by the NAIC and has been adopted by every state in some form, provides the basic rules for determining the minimum amount of reserves that must be held by a company. The Commissioner’s Reserve Valuation Method (CRVM) (for life insurance contracts) and the Commissioner’s Annuity Reserve Valuation Method (CARVM) (for annuity contracts) are in the Standard Valuation Law. The Standard Valuation Law is interpreted by the Model Regulations and Actuarial Guidelines, which are also promulgated by the NAIC. The NAIC’s Valuation Manual is intended to consolidate into one document the minimum reserve requirements for insurance contracts. 

Section 805(a)(2)1 allows an insurance company to take a deduction for increases in certain life insurance reserves. More, specifically, section 807(b) provides that if, for any taxable year, the closing balance of “the items described in subsection (c)” (which includes life insurance reserves) exceeds the opening balance, the excess is taken into account as a deduction under section 805(a)(2). By contrast, section 807(a) provides that if the opening balance exceeds the closing balance, the excess is included in gross income under section 803(a)(2).

The method of determining life insurance reserves for use in computing an insurance company’s taxable income is prescribed in section 807(d). For this purpose, the reserve for a contract is generally equal to the greater of (a) the net surrender value of such contract or (b) the amount of the reserve determined under section 807(d)(2). In no event may the reserve for any contract exceed the amount taken into account with respect to that contract as of that time in determining the statutory reserves (reduced by any deferred and uncollected premiums taken into account in determining the statutory reserves). Section 807(d)(1) (flush language); see also section 811(c).

Section 807(d)(2) provides that the reserve for any contract must be determined using (i) the tax reserve method applicable to that type of contract, (ii) the greater of the applicable federal interest rate or the prevailing state assumed interest rate, and (iii) the prevailing commissioner’s standard tables for morbidity or mortality adjusted as appropriate to reflect the risks (such as substandard risks) incurred under the contract that are not otherwise taken into account.


1 Unless otherwise indicated, all sections references are to sections of the Internal Revenue Code prior to the adoption of Pub. L. No. 115-97 (the TCJA), which amended the law relating to the computation of life insurance reserves under section 807(d). No inference should be drawn from this Directive regarding the computation of life insurance reserves under section 807(d) as amended by the TCJA.

Under section 807(d)(3), the tax reserve method that applies to a variable annuity contract is the CARVM prescribed by the NAIC that is in effect on the date the contract was issued. Similarly, the tax reserve method that applies to a life insurance contract is the CRVM prescribed by the NAIC that is in effect on the date the contract was issued.

CARVM for variable annuities is interpreted in AG 43, which clarifies the assumptions and methodologies that comply with the intent of the Standard Valuation Law. AG 43 became effective on December 31, 2009, for all variable annuity contracts issued on or after January 1, 1981. AG 43 was effectively incorporated in part 21 of the Valuation Manual (VM-21) adopted by the NAIC on December 2, 2012. VM-21 is effective for all variable annuity contracts issued on or after January 1, 2017. 

In Notice 2010-29, 2010-1 C.B. 547, the Internal Revenue Service provided interim guidance to issuers of variable annuity contracts as a result of the NAIC’s adoption of AG 43. Under the Notice, for a contract falling within the scope of AG 43 and issued on or after December 31, 2009, the tax reserve method, with respect to such a contract under section 807(d)(2)(A) and (d)(3), is the method prescribed in AG 43 for determining the Standard Scenario Amount (SSA) (applied using the appropriate valuation interest rate under section 807(d)(2)(B) and certain other adjustments). The provisions for determining the Conditional Tail Expectation Amount (CTEA) are not taken into account. 

Part 20 of the Valuation Manual (VM-20) prescribes minimum reserve valuation standards for individual life insurance contracts. VM-20 incorporates a principle based reserve standard similar in concept to the AG 43 standard for variable annuity contracts. The requirements of VM-20 constitute the CRVM requirements effective for certain life insurance contracts issued on or after January 1, 2017.

Definitions:

“Accepted Method” is the Accepted Method for Eligible AG 39 VA Contracts, the Accepted Method for Eligible VA Contracts, and the Accepted Method for Eligible Life Insurance Contracts.

“Accepted Method for Eligible AG 39 VA Contracts” is the Accepted Method for Eligible VA Contracts as applied to Eligible AG 39 Contracts as described in section D of this Directive.

“Accepted Method for Eligible Life Insurance Contracts” is the method described in section B.2. of this Directive.

“Accepted Method for Eligible VA Contracts” is the method described in section B.1. of this Directive.

“AG 39” is Actuarial Guideline XXXIX, published by the National Association of Insurance Commissioners.

“AG 39 year” is any tax year ending after December 31, 2009 in which the insurance company was required for statutory accounting purposes to maintain and did maintain a life insurance reserve for an Eligible AG 39 VA Contract that was determined under AG 43. 

“AG 43” is Actuarial Guideline XLIII, published by the National Association of Insurance Commissioners.

“Allocated Conditional Tail Expectation Amount” or “Allocated CTEA” means the amount of the Conditional Tail Expectation Amount (as described in AG 43 or VM-21, as applicable) allocated to an Eligible VA Contract (as described in AG 43 or VM-21, as applicable). 

“Allocated Deterministic Reserve/Stochastic Reserve” means the amount of the deterministic reserve or stochastic reserve that is allocated to an Eligible Life Insurance Contract as described in VM-20.

“Annual Statement” means the annual statement, the form of which is approved by the National Association of Insurance Commissioners (NAIC), which is filed by an insurance company for the year with the insurance departments of States, Territories, and the District of Columbia. The term annual statement also includes a pro forma annual statement if the insurance company is not required to file the NAIC annual statement.

“Conditional Tail Expectation Amount” or “CTEA” is the conditional tail expectation amount based on CTE (70) and is equal to the numerical average of the 30 percent largest values of the Scenario Greatest Present Values, as described in AG 43 or VM-21, as applicable. 

“Consolidated Group” means a consolidated group as defined in Treasury regulation section 1.1502-1.

“Eligible AG 39 VA Contract” is a variable annuity contact with guaranteed living benefits issued before December 31, 2009, that was subject to AG 39.

“Eligible Life Insurance Contract” is a life insurance contract issued on or after January 1, 2017, that is subject to VM-20 and for which the insurance company implemented VM-20 for statutory accounting purposes.

“Eligible VA Contract” is a variable annuity contract issued on or after December 31, 2009, that is subject to either AG 43 or VM-21.

“Federally Prescribed Reserve” is the reserve determined under section 807(d)(2).

“Net Premium Reserve” means the amount of net premium reserve for an Eligible Life Insurance Contract as described in VM-20 (reduced for any amounts of deferred and uncollected net premiums).

“Open Year” is (1) a taxable year for which a refund claim may be filed under section 6511 if applying an Accepted Method for such year would result in a decrease in taxable income for such year or (2) a taxable year for which an assessment may be made under section 6501 if applying an Accepted Method for such year would result in an increase in taxable income for such year. The determination of what constitutes an Open Year should be made on a Consolidated Group basis.

“Processable Adjustments” are (i) adjustments resulting from carrybacks or carryforwards arising from the implementation of this Directive, (ii) adjustments resulting from final determinations from administrative or judicial proceedings, (iii) adjustments necessary to conform a year’s closing tax reserve balance to the following year’s opening tax reserve balance, or (iv) adjustments needed to correct purely mathematical or posting errors.

“Standard Scenario Amount” or “SSA” means the reserve determined by applying the standard scenario method as described in AG 43 or VM-21, as applicable, to an Eligible VA Contract.

“VM-20” is part 20 of the Valuation Manual, published by the National Association of Insurance Commissioners.

“VM-21” is part 21 of the Valuation Manual, published by the National Association of Insurance Commissioners.

“VM-20 year” is any tax year in which the insurance company reported a life insurance reserve for an Eligible Life Insurance Contract on its Annual Statement.

“VM-21/AG-43 year” is any tax year in which the insurance company was required to maintain a life insurance reserve for an Eligible VA Contract.

Issue Tracking:

Any cases having this issue should use the following UIL Code 807.03-02.

Examination Guidance:

A. In General

1. Guidance Regarding Eligible VA Contracts & Eligible Life Insurance Contracts

For tax years 2010 through 2016,2 LB&I examiners should discontinue any current examination of the Federally Prescribed Reserve for Eligible VA Contracts if the insurance company timely provides a copy of the Certification Statement for Eligible VA Contracts described in this Directive. If an insurance company implements this Directive, LB&I examiners should not make any adjustments to taxable income reported on an insurance company’s original returns (such as allowing claims for refunds and affirmative adjustments) for tax years 2010 through 2016 that are based on adjustments to the Federally Prescribed Reserve for Eligible VA Contracts unless the adjustments are Processable Adjustments.


2 A reference to a year (e.g., 2017) refers to a taxable year that begins within the referenced calendar year.

For the tax year 2017, LB&I examiners should not challenge the Federally Prescribed Reserve for Eligible VA Contracts or Eligible Life Insurance Contracts reported on the insurance company’s return if the method used is described in this Directive and the insurance company provides the Certification Statement described in this Directive. An insurance company’s compliance with this Directive may be examined in connection with an examination of the 2017 tax year.

For tax years after 2017, LB&I examiners also should not challenge any ten-year spread resulting from implementation of the methods described in this Directive that is taken into account as described in this Directive if the insurance company timely provides a copy of the Certification Statement for Eligible VA Contracts described in this Directive. 

Please contact the LB&I Life Insurance Practice Network for guidance.

2. Guidance Regarding Eligible AG 39 VA Contracts

For tax years 2010 through 2016, LB&I examiners should discontinue any current examination of the Federally Prescribed Reserve for Eligible AG 39 VA Contracts if the insurance company timely provides a copy of the Certification Statement for Eligible AG 39 VA Contracts described in this Directive. If an insurance company implements this Directive, LB&I examiners should not make any adjustments to taxable income reported on an insurance company’s original returns (such as allowing claims for refunds and affirmative adjustments) for tax years 2010 through 2016 that are based on adjustments to the Federally Prescribed Reserve for Eligible AG 39 VA Contracts unless the adjustments are Processable Adjustments. 

For the tax year 2017, LB&I examiners should not challenge the Federally Prescribed Reserve for Eligible AG 39 VA Contracts reported on the insurance company’s return if the method used is described in this Directive and the insurance company provides the Certification Statement described in this Directive. An insurance company’s compliance with this Directive may be examined in connection with an examination of the 2017 tax year.

For tax years after 2017, LB&I examiners also should not challenge any ten-year spread resulting from implementation of the method described in this Directive that is taken into account as described in this Directive if the insurance company timely provides a copy of the Certification Statement for Eligible AG 39 VA Contracts described in this Directive. 

Please contact the LB&I Life Insurance Practice Network for guidance.

3. Additional Sections of this Directive

Section B of this Directive describes the accepted methods for computing the Federally Prescribed Reserves for Eligible VA Contracts and Eligible Life Contracts. Section C describes how these accepted methods should be implemented. Section D describes the accepted method for computing the Federally Prescribed Reserve for Eligible AG 39 VA Contracts and how this method should be implemented. Section E requires that certain values used in computing the Federally Prescribed Reserve be those used on the Annual Statement and provides other rules for implementing this Directive. Section F describes the manner in which the TCJA transition rule for life insurance reserves should be implemented by insurance companies adopting this Directive. Section G describes the certification that an insurance company must provide to be subject to this Directive.

B. Accepted Methods for Determining the Federally Prescribed Reserve

1. Accepted Method for Eligible VA Contracts

The Federally Prescribed Reserve for an Eligible VA Contract will be treated as the sum of:

a. the tax-adjusted Standard Scenario Amount (i.e., adjusted to take into account the interest rate and tables required by section 807(d)(2)) and

b. 96% of the excess (if any) of the Allocated Conditional Tail Expectation Amount over the Standard Scenario Amount (not tax-adjusted).

The life insurance reserve for an Eligible VA Contract under section 807(d) is equal to the greater of (a) the net surrender value of such contract or (b) the Federally Prescribed Reserve described above. In no event may the reserve for any contract exceed the amount taken into account with respect to that contract as of that time in determining the statutory reserves (reduced by any deferred and uncollected premiums taken into account in determining the statutory reserves). Section 807(d)(1) (flush language).

2. Accepted Method for Eligible Life Insurance Contracts

The Federally Prescribed Reserve for an Eligible Life Insurance Contract will be treated as the sum of:

a. the tax-adjusted Net Premium Reserve (i.e., adjusted to take into account the interest rate and tables required by section 807(d)(2)) and

b. 96% of the excess of the Allocated Deterministic Reserve/Stochastic Reserve (if any) over the Net Premium Reserve (not tax-adjusted).

The life insurance reserve for an Eligible Life Insurance Contract under section 807(d) is equal to the greater of (a) the net surrender value of such contract or (b) the Federally Prescribed Reserve described above. In no event may the reserve for any contract exceed the amount taken into account with respect to that contract as of that time in determining the statutory reserves (reduced by any deferred and uncollected premiums taken into account in determining the statutory reserves). Section 807(d)(1) (flush language).

C. Implementation of the Accepted Methods

1. Implementation for Eligible VA Contracts

The implementation of the Accepted Method for Eligible VA Contracts depends on whether a ten-year spread is required. For purposes of this Directive, a ten-year spread is required to implement the Accepted Method for Eligible VA Contracts as described in this Directive unless:

a. there would be no section 807(f) adjustment as a result of the application of the Accepted Method if the insurance company were to apply the Accepted Method in the earliest Open Year that is a VM-21/AG 43 year and consistently in subsequent years; 

b. the first VM-21/AG 43 year in which the Allocated Conditional Tail Expectation Amount exceeds the Standard Scenario Amount (not tax-adjusted) is an Open Year; or

c. the insurance company’s earliest Open Year that is a VM-21/AG 43 year reflects an operations loss carry forward from the insurance company’s first VM-21/AG-43 year that is after 2009 or the insurance company’s first VM-21/AG-43 year in which the Allocated Conditional Tail Expectation Amount exceeds the Standard Scenario Amount (not tax adjusted).

No Ten-Year Spread Required. If a ten-year spread is not required (as described above), then the Federally Prescribed Reserve for an Eligible VA Contract as of the close of 2017, is computed with the Accepted Method for VA Contracts. Accordingly, the increase or decrease in the balance of life insurance reserves for Eligible VA Contracts for 2017 is the difference between:

i. the opening life insurance reserve tax balance for 2017, as previously determined and reported on an original return adjusted as appropriate to reflect any Processable Adjustment, and

ii. the closing life insurance reserve tax balance for 2017, computed with the Accepted Method for Eligible VA Contracts.

Ten-Year Spread Required. If a ten-year spread is required (as described above), then the insurance company may implement the Accepted Method for Eligible VA Contracts and the associated ten-year spread under either of the following two options; provided, however, that if an insurance company has a tax year that is not an Open Year after the earliest Open Year that is a VM-21/AG 43 year tax, then Option 1 must be used:

Option 1 – Adjustments are computed as if an insurance company implemented the Accepted Method for Eligible VA Contracts in 2016. 

a) The ten-year spread is computed as if the Accepted Method for Eligible VA Contracts had been implemented in 2016, and the computation of the ten-year spread included contracts issued in 2016. Accordingly, the ten-year spread for Eligible VA Contracts is the difference between:

i. the opening life insurance reserve tax balance for 2017, as previously determined and reported on an original return adjusted as appropriate to reflect any Processable Adjustments and

ii. the opening life insurance reserve tax balance for 2017, computed with the Accepted Method for Eligible VA Contracts.

The ten-year spread amount is taken into account in equal amounts over 10 tax years starting in 2017.

b) The increase or decrease in the balance of life insurance reserves for Eligible VA Contracts for 2017 is the difference between:

i. the opening life insurance reserve tax balance for 2017, computed with the Accepted Method for Eligible VA Contracts and

ii. the closing life insurance reserve tax balance for 2017, computed with the Accepted Method for Eligible VA Contracts.

Option 2 – Adjustments are computed as if an insurance company implemented the Accepted Method for Eligible VA Contracts in each Open Year, but the aggregate amount of such adjustments is taken into account on the 2017 tax return. 

a) The ten-year spread is computed as if the Accepted Method for Eligible VA Contracts had been implemented in the earliest Open Year that is a VM-21/AG 43 year (without regard to any Eligible VA Contracts issued in the such year) and allocated equally to the ten tax years beginning immediately after such year;

i. the cumulative amount of the ten-year spread allocated to each year through 2017 is taken into account in 2017 and

ii. the remaining portions of the ten-year spread allocated to 2018 and subsequent years are taken into account in each of those future years.

b) Aggregate adjustments to life insurance tax reserves previously determined and reported on an original return (adjusted as appropriate to reflect any Processable Adjustments) that otherwise would have been required to reflect implementation of the Accepted Method for Eligible VA Contracts in the earliest Open Year that is a VM-21/AG 43 year are taken into account in 2017. 

2. Implementation for Eligible Life Insurance Contracts

For insurance companies that adopted VM-20 in 2017, the Accepted Method for Eligible Life Insurance Contracts is implemented by computing the Federally Prescribed Reserve for 2017 for an Eligible Life Insurance Contract using the Accepted Method for Eligible Life Insurance Contracts.

D. Accepted Method and Implementation for Certain Variable Annuity Contracts Issued Before December 31, 2009.

The Accepted Method for Eligible AG 39 VA Contracts may be implemented for Eligible AG 39 VA Contracts in the same manner as the Accepted Method for Eligible VA Contracts is implemented for Eligible VA Contracts with references to VM-21/AG 43 years considered as references to AG 39 years and references to Eligible VA Contracts considered as references to Eligible AG 39 VA Contracts.

E. Additional Provisions

In implementing the Accepted Method for Eligible VA Contracts and/or the Accepted Method for Eligible AG 39 VA Contracts, an insurance company must use the Standard Scenario Amount and Conditional Tail Expectation Amount reported under AG 43 and VM-21 in the company’s Annual Statement, including all accompanying notes, schedules, and exhibits.

In implementing the Accepted Method for Eligible Life Insurance Contracts, an insurance company must use the Net Premium Reserve, Deterministic Reserve, and Stochastic Reserves reported under VM-20 in the company’s Annual Statement, including all accompanying notes, schedules, and exhibits.

If an insurance company implements the Accepted Method for Eligible VA Contracts, it must also implement the Accepted Method for Life Insurance Contracts for any Eligible Life Insurance Contracts. If an insurance company implements the Accepted Method for Eligible VA Contracts or the Accepted Method for Eligible Life Insurance Contracts, such methods (and any adoption of either Option 1 or Option 2 in section C.1. of this Directive) must also be implemented by all members of any Consolidated Group of which such insurance company is a member at any time during the taxable year.

An insurance company will be considered to have properly implemented this Directive if it attempts in good faith to implement this Directive and subsequently and in good faith provides any necessary corrections or additional information.

F. Coordination with Pub. L. No. 115-97 (TCJA)

For purposes of implementing the transition relief under section 13517(c)(3) of the TCJA for insurance companies that follow this Directive, the reserve referenced in section 13517(c)(3)(A)(ii) must take into account the determination of the reserve in accordance with this Directive.

G. Certification Statement

To be eligible for this Directive, an insurance company must sign and complete in good faith (and timely provide any necessary corrections) the attached LB&I Directive Related to Certain Variable Annuity Contracts (AG 43/VM-21) and Certain Life Insurance Contracts (VM-20) Certification Statement (“Certification Statement”). An insurance company must complete all sections of the Certification Statement, have it signed by an authorized individual, and attach it to its 2017 return. If the insurance company is under exam for any tax year, the insurance company must provide a copy of the Certification Statement to the LB&I examiner within 30 days of a request for such statement. For a consolidated Federal income tax return, a separate Certification Statement may be requested for each insurance company. An LB&I examiner will consider any insurance company not in compliance with these requirements to be ineligible for this Directive and subject to regular audit procedures.

The Certification Statement must be signed by an individual who is authorized to execute the insurance company’s Federal income tax return. The individual must certify, under penalty of perjury, that the insurance company and any Consolidated Group of which it is a member (i) used the accepted method(s) set forth in this Directive, (ii) computed the ten-year spread, if any, as set forth in this Directive, (iii) agrees to properly report the ten-year spread in accordance with this Directive, and (iv) agrees not to pursue a refund claim for any issue covered by this Directive that is inconsistent with the acceptance of this Directive; provided, however, that a refund claim may be pursued if the insurance company’s claim (or claim of the Consolidated Group of which the insurance company is a member) is based on (i) a good-faith assertion that this Directive has been erroneously implemented, (ii) a good-faith correction necessary to properly implement this Directive, or (iii) a Processable Adjustment.

Insurance companies should retain the underlying accounting documentation that would permit the LB&I examiner to verify the insurance company’s compliance with the requirements of this Directive. If an insurance company fails to properly and timely submit the requested documentation, then the LB&I examiner may determine that this Directive does not apply to the insurance company (or any member of the Consolidated Group of which the insurance company is a member).

H. Contact

Questions concerning this Directive should be directed to the LB&I Life Insurance Practice Network. 


I.R.C. Section 807: LB&I Directive Related to Principle Based Reserves for Variable Annuity Contracts (AG 43/VM-21) and Life Insurance Contracts (VM-20)

Certification Statement

Insurance Company Name:  ______________________________________________  EIN:   __________________

Tax Year:   ____________________  Relevant Period of the Annual Statement:   ___________________________

This Certification Statement must be completed for each insurance company, without regard to whether it is a member of a Consolidated Group.

If the insurance company is a member of a Consolidated Group, please provide:

Name of the Parent of the Consolidated Group:  _____________________________  EIN:  ___________________

A. Indicate for which of the following types of contracts the 2017 tax return reflects the adjustments described in this Directive:

                    __________  Eligible VA Contracts

                    __________  Eligible AG 39 VA Contracts

                    __________  Eligible Life Insurance Contract

B. Information for implementing the Accepted Method when there is no ten-year spread required:

  *Opening Balance for 2017  **Closing Balance for 2017
Eligible VA Contracts      
Eligible AG 39 VA Contracts      
Eligible Life Insurance Contract   N/A   

*Opening life insurance reserve tax balance for 2017, as previously determined and reported on a return (adjusted as appropriate to reflect any Processable Adjustment).

**Closing life insurance reserve tax balance for 2017 computed under the Accepted Method.

C. If a ten-year spread is required, please choose Option 1 or Option 2 as described in the directive and provide the information below:

________ Option 1 Eligible VM-21 /AG 43 VA Contracts  Eligible AG 39 VA Contracts
First Open Year       
Opening life insurance reserve tax balance for 2017, as previously determined and reported on a return (adjusted as appropriate to reflect any Processable Adjustment):    
Opening life insurance reserve tax balance for 2017 computed with the Accepted Method:      
Ten-year spread amount for each of the 10 years in which adjustment is taken into account:      
Closing life insurance reserve tax balance for 2017 computed with the Accepted Method:    
The increase or decrease in the balance of the life insurance tax reserves for 2017:      

OMB No. 1545-0123


___________  Option 2 Eligible VM-21 /AG43 VA Contracts Eligible AG 39 VA Contracts
First Open Year:      
Are there any Open Years that precede a year that is not an Open Year?    
Amount of ten-year spread allocated to each open year:     
Cumulative amount of the ten-year spread taken into account in 2017:      
Remaining ten-year spread allocable to 2018 and subsequent years:      
The amount of life insurance tax reserve adjustments for each year prior to 2017 required to reflect the implementation of the Accepted Method:     

Certification

By signing this Certification Statement, the insurance company agrees to readily provide (upon request of the IRS) all relevant data and records to establish to the satisfaction of the IRS that the statements made in this Certification Statement are true, correct and complete.

I certify, under penalty of perjury, that for the tax year to which this Certification Statement applies, the insurance company and each member of the Consolidated Group of which the insurance company is a member:

(i) used the method(s) set forth in this Directive;

(ii) computed the ten-year spread in compliance with this Directive;

(iii) agrees to properly report the ten-year spread in accordance with this Directive;

and

(iv) agrees not pursue a refund claim for any issue covered by this Directive that is inconsistent with the acceptance of this Directive; provided, however, that a refund claim may be pursued if the insurance company’s claim (or claim of the Consolidated Group of which the insurance company is a member) is based on a good-faith assertion that this Directive has been erroneously implemented or is based on a Processable Adjustment.

I certify, under penalty of perjury, that I have examined this Certification Statement, and to the best of my knowledge and belief, it is true, correct, and complete.

Signature: _________________________________________________________

Date: ____________________________Title: ____________________________

For corporations, the certification must be signed by an individual authorized under I.R.C. section 6062.

 

OMB No. 1545-0123