Definitions
(1) Investment in the contract
(1)Investment in the contract#
For purposes of subsection (b), the investment in the contract as of the annuity starting date is—
(A) the aggregate amount of premiums or other consideration paid for the contract, minus
(B) the aggregate amount received under the contract before such date, to the extent that such amount was excludable from gross income under this subtitle or prior income tax laws.
(1)(A)#
the aggregate amount of premiums or other consideration paid for the contract, minus
(1)(B)#
the aggregate amount received under the contract before such date, to the extent that such amount was excludable from gross income under this subtitle or prior income tax laws.
(2)Adjustment in investment where there is refund feature#
If—
(A) the expected return under the contract depends in whole or in part on the life expectancy of one or more individuals;
(B) the contract provides for payments to be made to a beneficiary (or to the estate of an annuitant) on or after the death of the annuitant or annuitants; and
(C) such payments are in the nature of a refund of the consideration paid,
then the value (computed without discount for interest) of such payments on the annuity starting date shall be subtracted from the amount determined under paragraph (1). Such value shall be computed in accordance with actuarial tables prescribed by the Secretary. For purposes of this paragraph and of subsection (e)(2)(A), the term “refund of the consideration paid” includes amounts payable after the death of an annuitant by reason of a provision in the contract for a life annuity with minimum period of payments certain, but (if part of the consideration was contributed by an employer) does not include that part of any payment to a beneficiary (or to the estate of the annuitant) which is not attributable to the consideration paid by the employee for the contract as determined under paragraph (1)(A).
(2)(A)#
the expected return under the contract depends in whole or in part on the life expectancy of one or more individuals;
(2)(B)#
the contract provides for payments to be made to a beneficiary (or to the estate of an annuitant) on or after the death of the annuitant or annuitants; and
(3)Expected return#
For purposes of subsection (b), the expected return under the contract shall be determined as follows:
(A) Life expectancy If the expected return under the contract, for the period on and after the annuity starting date, depends in whole or in part on the life expectancy of one or more individuals, the expected return shall be computed with reference to actuarial tables prescribed by the Secretary.
(B) Installment payments If subparagraph (A) does not apply, the expected return is the aggregate of the amounts receivable under the contract as an annuity.
(3)(A)Life expectancy#
If the expected return under the contract, for the period on and after the annuity starting date, depends in whole or in part on the life expectancy of one or more individuals, the expected return shall be computed with reference to actuarial tables prescribed by the Secretary.
(3)(B)Installment payments#
If subparagraph (A) does not apply, the expected return is the aggregate of the amounts receivable under the contract as an annuity.
(4)Annuity starting date#
For purposes of this section, the annuity starting date in the case of any contract is the first day of the first period for which an amount is received as an annuity under the contract.