Change in substantially equal payments
(A) In general If— (i) paragraph (1) does not apply to a distribution by reason of paragraph (2)(D), and (ii) the series of payments under such paragraph are subsequently modified (other than by reason of death or disability)— (I) before the close of the 5-year period beginning on the date of the first payment and after the taxpayer attains age 59½, or (II) before the taxpayer attains age 59½, the taxpayer’s tax for the 1st taxable year in which such modification occurs shall be increased by an amount, determined under regulations, equal to the tax which (but for paragraph (2)(D)) would have been imposed, plus interest for the deferral period (within the meaning of subsection (t)(4)(B)).
(B) Exchanges to subsequent contracts If— (i) payments described in paragraph (2)(D) are being made from an annuity contract, (ii) an exchange of all or a portion of such contract for another contract is made under section 1035, and (iii) the aggregate distributions from the contracts involved in the exchange continue to satisfy the requirements of paragraph (2)(D) as if the exchange had not taken place, such exchange shall not be treated as a modification under subparagraph (A)(ii), and compliance with paragraph (2)(D) shall be determined on the basis of the combined distributions described in clause (iii).
(A)In general#
If—
(i) paragraph (1) does not apply to a distribution by reason of paragraph (2)(D), and
(ii) the series of payments under such paragraph are subsequently modified (other than by reason of death or disability)— (I) before the close of the 5-year period beginning on the date of the first payment and after the taxpayer attains age 59½, or (II) before the taxpayer attains age 59½,
the taxpayer’s tax for the 1st taxable year in which such modification occurs shall be increased by an amount, determined under regulations, equal to the tax which (but for paragraph (2)(D)) would have been imposed, plus interest for the deferral period (within the meaning of subsection (t)(4)(B)).
(A)(i)#
paragraph (1) does not apply to a distribution by reason of paragraph (2)(D), and
(A)(ii)#
the series of payments under such paragraph are subsequently modified (other than by reason of death or disability)—
(I) before the close of the 5-year period beginning on the date of the first payment and after the taxpayer attains age 59½, or
(II) before the taxpayer attains age 59½,
(A)(ii)(I)#
(B)Exchanges to subsequent contracts#
If—
(i) payments described in paragraph (2)(D) are being made from an annuity contract,
(ii) an exchange of all or a portion of such contract for another contract is made under section 1035, and
(iii) the aggregate distributions from the contracts involved in the exchange continue to satisfy the requirements of paragraph (2)(D) as if the exchange had not taken place,
such exchange shall not be treated as a modification under subparagraph (A)(ii), and compliance with paragraph (2)(D) shall be determined on the basis of the combined distributions described in clause (iii).
(B)(i)#
payments described in paragraph (2)(D) are being made from an annuity contract,
(B)(ii)#
an exchange of all or a portion of such contract for another contract is made under section 1035, and
(B)(iii)#
the aggregate distributions from the contracts involved in the exchange continue to satisfy the requirements of paragraph (2)(D) as if the exchange had not taken place,