459. How is expected return computed under the annuity rules?Stevenrcline202015-04-28T17:58:00Z2015-04-28T17:58:00Z24712688Summit Business Media226315314Site Map/Annuities/Nonqualified/Amounts Received as an Annuity/Fixed Annuities/Basic Rule2005-01-24T00:00:00ZTaxFactsDefaultArticleSite Map/Annuities/Quick Clicks/Exclusion Ratio10009-00-TF1.xml9.00;#1579;#1594;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 1How do you compute expected return under the annuity rules?1264133900.000000000TaxFactsDefaultArticle2010-01-20T13:17:48ZSBMEDIA\jgrady459. How is expected return on a non-variable annuity computed under the annuity rules?Generally speaking, expected return is the total amount that the annuitant or annuitants can expect to receive over the annuitization period of the contract.If payments are for a fixed period or a fixed amount with no life expectancy involved, expected return is the sum of the guaranteed payments (Q 470)..IRC Sec. 72(c)(3)(B); Treas. Reg. §1.72-5(c).If payments are to continue for a life or lives, expected return is derived by multiplying the sum of one year’s annuity payments by the life expectancy of the measuring life or lives. The life expectancy multiple or multiples must be taken from the Annuity Tables prescribed by the IRS..IRC Sec. 72(c)(3). (See Appendix A for IRS Annuity Tables).Generally, gender-based Tables I - IV are to be used if the investment in the contract does not include a post-June 30, 1986 investment. Unisex Tables V - VIII are to be used if the investment in the contract includes a post-June 30, 1986 investment. Transitional rules permit an irrevocable election to use the unisex tables even where there is no post-June 1986 investment and, if investment in the contract includes both a pre-July 1986 investment and a post-June 1986 investment, an election may be made in some situations to make separate computations with respect to each portion of the aggregate investment in the contract using, with respect to each portion, the tables applicable to it..Treas. Reg. §1.72-9. See Appendix A for details.The life expectancy for a single life is found in Table I or in Table V, whichever is applicable (Q 461). The life expectancy multiples for joint and survivor annuities are taken from Tables II and IIA or Tables VI and VIA, whichever are applicable (Q 464 to Q 467)..Treas. Regs. §§1.72-5(a), 1.72-5(b).The Annuity Tables are entered with the age of the measuring life as of his or her birthday nearest the annuity starting date (Q 460). The multiples in the Annuity Tables are based on monthly payments. Consequently, where the annuity payments are to be received quarterly, semi-annually, or annually, the multiples from Tables I, II, and IIA or, as applicable, Tables V, VI, and VIA, must be adjusted. This adjustment is made by use of the Frequency of Payment Adjustment Table (Appendix A). No adjustment is required if the payments are monthly.