rr-16-02.pdf

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Part I

Section 807.--Rules for Certain Reserves

Rev. Rul. 2016-02

For purposes of § 807(d)(4) of the Internal Revenue Code, for taxable years
beginning after December 31, 2014, 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 2015 and 2016, and a supplement to the table in Part IV of
Rev. Rul. 92-19, providing the applicable federal interest rates under § 807(d) for 2015
and 2016. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.

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This is the twenty-fourth 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, 1998-1 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.
2001-11, 2001-1 C.B. 780 (2000 and 2001); Rev. Rul. 2002-12, 2002-1 C.B. 624 (2001
and 2002); Rev. Rul. 2003-24, 2003-1 C.B. 557 (2002 and 2003); Rev. Rul. 2004-14,
2004-1 C.B. 511 (2003 and 2004); Rev. Rul. 2005-29, 2005-1 C.B. 1080 (2004 and
2005); Rev. Rul. 2006-25, 2006-1 C.B. 882 (2005 and 2006); Rev. Rul. 2007-10, 2007-1
C.B. 660 (2006 and 2007); Rev. Rul. 2008-19, 2008-1 C.B. 669 (2007 and 2008); Rev.
Rul. 2009-3, 2009-5 I.R.B. 382 (2008 and 2009); Rev. Rul. 2010-7, 2010-8 I.R.B. 417
(2009 and 2010); Rev. Rul. 2011-23, 2011-43 I.R.B. 585 (2010 and 2011); Rev. Rul.
2012-6, 2012-6 I.R.B. 349 (2011 and 2012); Rev. Rul. 2013-4, 2013-9 I.R.B. 520 (2012
and 2013); Rev. Rul. 2014-4, 2014-5 I.R.B. 449 (2013 and 2014); and Rev. Rul. 2015-
02, 2015-03 I.R.B. 325 (2014 and 2015).

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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

2016

10 or fewer 3.75**

More than 10
3.75**
but not more than 20

More than 20
3.50**

Source: Rates calculated from the monthly averages, ending June 30, 2015, of
Moody’s Composite Yield on Seasoned Corporate Bonds.

*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.

**As these rates exceed the applicable federal interest rate for 2016 of 1.56 percent, the
valuation interest rate to be used for this product under § 807 is the applicable rate
specified in this table.

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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
2015 4.00*

Source: Rates calculated from the monthly averages, ending June 30, 2015, of
Moody’s Composite Yield on Seasoned Corporate Bonds.

*As this prevailing state assumed interest rate exceeds the applicable federal interest
rate for 2015 of 1.68 percent, the valuation interest rate of 4.00 percent is to be used for
this product under § 807.

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Part III, Schedule C24 - 2015

STATUTORY VALUATION INTEREST RATES
BASED ON NAIC STANDARD VALUATION LAW
FOR 2015 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 4.00* 3.75* 3.50*

More than 5, but not 4.00* 3.75* 3.50*
more than 10
More than 10, but not 3.75* 3.50* 3.50*
more than 20
More than 20 3.50* 3.50* 3.50*

Yes No 5 or fewer 4.00* 3.75* 3.75*

More than 5, but not 4.00* 3.75* 3.75*
more than 10
More than 10, but not 3.75* 3.75* 3.50*
more than 20
More than 20 3.50* 3.50* 3.50*

No Yes or No 5 or fewer 4.00*

More than 5, but not 4.00* NOT
more than 10 APPLICABLE
More than 10, but not 3.75*
more than 20
More than 20 3.50*

Source: Rates calculated from the monthly averages, ending June 30, 2015, of
Moody’s Composite Yield on Seasoned Corporate Bonds.

*As these rates exceed the applicable federal interest rate for 2015 of 1.68 percent, the
valuation interest rate to be used for this product under § 807 is the applicable rate
specified in the above table.

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Part III, Schedule D24 -- 2015

STATUTORY VALUATION INTEREST RATES
BASED ON NAIC STANDARD VALUATION LAW
FOR 2015 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 4.25* 4.00* 3.75*

More than 5, but not 4.00* 4.00* 3.75*
more than 10
More than 10, but not 4.00* 4.00* 3.50*
more than 20
More than 20 3.75* 3.75* 3.50*

Yes No 5 or fewer 4.25* 4.00* 3.75*

More than 5, but not 4.25* 4.00* 3.75*
more than 10
More than 10, but not 4.00* 4.00* 3.75*
more than 20
More than 20 3.75* 3.75* 3.50*

Source: Rates calculated from the monthly averages, ending June 30, 2015, of
Moody’s Composite Yield on Seasoned Corporate Bonds.

* As these rates exceed the applicable federal interest rate for 2015 of 1.68 percent, the
valuation interest rate to be used for this product under § 807 is the applicable rate
specified in the above table.

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Part IV. Applicable Federal Interest Rates.

TABLE OF
APPLICABLE FEDERAL INTEREST RATES
_______FOR PURPOSES OF § 807_______

Year Interest Rate

2015 1.68
2016 1.56

Sources: Rev. Rul. 2004-106, 2004-2 C.B. 893, for the 2005 rate; Rev. Rul. 2005-77,
2005-2 C.B. 1071, for the 2006 rate; Rev. Rul. 2006-61, 2006-2 C.B 1028 for the 2007
rate; Rev. Rul. 2007-70, 2007-2 C.B. 1158 for the 2008 rate; Rev. Rul. 2008-53, 2008-2
C.B. 1231 for the 2009 rate; Rev. Rul. 2009-38, 2009-49 I.R.B. 736, for the 2010 rate;
Rev. Rul. 2010-29, 2010-50 I.R.B. 818 for the 2011 rate; Rev. Rul. 2011-31, 2011-49
I.R.B. 829 for the 2012 rate; Rev. Rul. 2012-31, 2012-49 I.R.B. 636 for the 2013 rate;
Rev. Rul. 2013-26, 2013-50 I.R.B. 628 for the 2014 rate; Rev. Rul. 2014-31, 2014-50
I.R.B. 935 for the 2015 rate; and Rev. Rul. 2015-25, 2015-49 I.R.B. 695 for the 2016
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 2015 and 2016 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 Linda K. Boyd of the Office of
Associate Chief Counsel (Financial Institutions and Products). For further information
regarding this revenue ruling contact her at (202) 317-6995 (not a toll-free call).