IRS Revenue Ruling
2000-17

Code Sec. 807

<<FULL TEXT>>

Insurance companies; interest rate tables. Prevailing state assumed
interest rates are provided for the determination of reserves under
section 807 of the Code for contracts issued in 1999 and 2000. Rev. Rul.
92-19 supplemented.


REV. RUL. 2000-17

For purposes of section 807(d)(4) of the Internal Revenue Code, for
taxable years beginning after December 31, 1998, 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 section 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 1999 and 2000, and a
supplement to the table in Part IV of Rev. Rul. 92-19, providing the
applicable federal interest rate under section 807(d) for 1999 and 2000.
This ruling does not supplement Parts I and II of Rev. Rul. 92-19.

This is the eighth 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. 8 (1996 and 1997), Rev. Rul. 98-2, 1998-2
I.R.B. 15 (1997 and 1998), and Rev. Rul. 99-10, 1999-10 I.R.B. 10 (1998
and 1999).


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 Calendar Year
(years) of Issue 2000
------------------ -------------
10 or fewer 5.00 <**>
More than 10 but not more than 20 4.75 <**>
More than 20 4.50 <**>

Source: Rates calculated from the monthly averages, ending June 30, 1999,
of Moody's Corporate Bond Yield Average Monthly Average Corporates.

----------
*/ 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 the applicable federal interest rate for 2000 of 6.09 percent
exceeds this prevailing state assumed interest rate, the interest rate to
be used for this product under section 807 is 6.09 percent.


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 Valuation
of Issue Interest Rate
------------- -------------
1999 6.25 <*>

Source: Rates calculated from the monthly averages, ending June 30, 1999,
of 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 does not exceed the
applicable federal interest rate for 1999 of 6.30 percent, the applicable
federal interest rate of 6.30 percent is to be used for this product under
section 807.


Part III, Schedule C17 -- 1999

STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW
FOR 1999 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:

Valuation Interest Rate
Cash Future Guarantee For Plan Type
Settlement Interest Duration ------------------------
Options? Guarantee? (years) A B C
---------- ---------- --------- - - -
Yes Yes 5 or fewer 6.25 <*> 5.50 <*> 5.00 <*>
More than 5, but 6.00 <*> 5.50 <*> 5.00 <*>
not more than 10
More than 10, but 5.50 <*> 5.00 <*> 4.75 <*>
not more than 20
More than 20 4.75 <*> 4.50 <*> 4.50 <*>
Yes No 5 or fewer 6.25 5.50 <*> 5.25 <*>
More than 5, but 6.25 <*> 5.50 <*> 5.25 <*>
not more than 10
More than 10, but 5.75 <*> 5.25 <*> 5.00 <*>
not more than 20
More than 20 5.00 <*> 4.50 <*> 4.50 <*>
No Yes or No 5 or fewer 6.25 <*>
More than 5, but 6.00 <*>
not more than 10 NOT APPLICABLE
More than 10, but 5.50 <*>
not more than 20
More than 20 4.75 <*>

Source: Rates calculated from the monthly averages, ending June 30, 1999
of Moody's Corporate Bond Yield Average Monthly Average Corporates.

----------
*/ As the applicable federal interest rate for 1999 of 6.30 percent
exceeds this prevailing state assumed interest rate, the interest rate to
be used for this product under section 807 is 6.30 percent.

Part III, Schedule D17 -- 1999

STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW
FOR 1999 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:

Valuation Interest Rate
Cash Future Guarantee For Plan Type
Settlement Interest Duration -----------------------
Options? Guarantee? (years) A B C
---------- ---------- --------- - - -
Yes Yes 5 or fewer 6.75 6.25 <*> 5.25 <*>
More than 5, but 6.50 6.25 <*> 5.25 <*>
not more than 10
More than 10, but 6.25 <*> 6.00 <*> 5.00 <*>
not more than 20
More than 20 5.50 <*> 5.50 <*> 4.50 <*>
Yes No 5 or fewer 7.00 6.50 5.50 <*>
More than 5, but 6.75 6.50 5.50 <*>
not more than 10
More than 10, but 6.25 <*> 6.25 <*> 5.25 <*>
not more than 20
More than 20 5.50 <*> 5.50 <*> 4.75 <*>

Source: Rates calculated from the monthly averages, ending June 30, 1999,
of Moody's Corporate Bond Yield Average Monthly Average Corporates.

----------
*/ As the applicable federal interest rate for 1999 of 6.30 percent
exceeds this prevailing state assumed interest rate, the interest rate to
be used for this product under section 807 is 6.30 percent.


Part IV. Applicable Federal Interest Rates.

TABLE OF APPLICABLE FEDERAL INTEREST RATES FOR PURPOSES OF SECTION 807

Interest
Year Rate
---- --------
1999  6.30
2000  6.09

Sources: Rev. Rul. 98-57, 1998-49 I.R.B. 4 for the 1999 rate and Rev. Rul.
99-48, 1999-49 I.R.B. 600 for the 2000 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 section 807 for
certain insurance products issued in 1999 and 2000 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 Assistant Chief Counsel (Financial Institutions and Products).
For further information regarding this revenue ruling contact her on (202)
622-3970 (not a toll-free call).

<<END RULING>>

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