rr-04-14.pdf

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Part I

Section 807.--Rules for Certain Reserves

Rev. Rul. 2004-14

For purposes of ' 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
' 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 ' 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, 1998-2 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.
2001-1, 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, 2003-10 I.R.B. 557 (2002 and 2003).

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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

2004

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, 2003, of
Moody’s Composite Yield on Seasoned Corporate Bonds (formerly known as Moody's
Corporate Bond Yield Average -- Monthly Average Corporates).

** 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
' 807 is 4.82 percent.

* 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.

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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*

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.

*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 ' 807.

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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 Valuation Interest Rate
Settlement Interest Guarantee Duration For Plan Type
Options?
Guarantee? (years) A B C

Yes Yes 5 or fewer 6.00 5.25* 4.75*

More than 5, but not 5.75 5.25* 4.75*
more than 10
More than 10, but not 5.50 4.75* 4.75*
more than 20
More than 20 4.75* 4.25* 4.25*

Yes No 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*

No Yes or No 5 or fewer 6.00

More than 5, but not 5.75 NOT
more than 10 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, 2003, of
Moody’s Composite Yield on Seasoned Corporate Bonds (formerly known as Moody's
Corporate Bond Yield Average -- Monthly Average Corporates).

*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 ' 807 is
5.27 percent.

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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 Valuation Interest Rate
Settlement Interest Guarantee Duration For Plan Type
Options?
Guarantee? (years) A B C

Yes Yes 5 or fewer 6.50 6.25 5.00*

More than 5, but not 6.25 6.25 5.00*
more than 10
More than 10, but not 6.00 5.75 5.25*
more than 20
More than 20 5.25* 5.25* 4.50*

Yes No 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 4.75*

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).

*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 ' 807 is 5.27 percent.

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Part IV. Applicable Federal Interest Rates.

TABLE OF
APPLICABLE FEDERAL INTEREST RATES
FOR PURPOSES OF ' 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 ' 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).