The IRS recently gave a boost to "hybrid" annuity products with optional long-term care chronic benefit riders.
In March, the IRS issued Private Letter Ruling (PLR) 201105001, affirming that a long-term care chronic illness rider attached to a variable or fixed annuity contract will be treated as an insurance contract under Revenue Code section 7702B.
Long-term care/chronic illness benefits paid out under the rider will be received tax-free. This PLR pertained only to riders issued by stock life insurance companies, and it applies to riders in which long-term care risk is actually shifted from the taxpayer to the insurance company – i.e., payouts don't merely represent withdrawals of VA account balances.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
