Allianz Life Has a Letter, Too
The company is one of four known to have IRS permission to deduct advisor fees directly from annuity assets.
Allianz Life Insurance Company of North America announced today that it has received a tax ruling that could help it offer annuities through fee-based advisors.
The Internal Revenue Service gave Allianz Life a private letter ruling that will let advisors get their fees directly from the assets inside a client’s Allianz Life annuity contract, without creating a taxable income distribution event.
(Related: IRS Rules for Nationwide and Lincoln on Annuity Advisory Fees)
The IRS ruling applies to individual variable annuities held outside individual retirement accounts, and outside other arrangements that qualify for special IRS tax treatment.
The ruling also applies to indexed annuities that are filed as fixed insurance products and held outside qualified accounts.
Under IRS rules, advisors can already deduct asset-based fees from annuities held inside qualified retirement accounts without creating taxable income distributions.
The March of the Letter Rulings
Allianz Life is the fourth company to announce that it has received an annuity advisory fee letter ruling in the past few weeks. The other three carriers are Great-American, Nationwide and Lincoln Financial.
Corey Walther, president of Allianz Life’s Allianz Life Financial Services LLC unit, said in a statement that the ruling will help the company meet consumers’ growing demand for annuities.
“It will allow registered investment advisors (RIAs) and fee-based advisors to more easily integrate annuities into their clients’ holistic financial plans,” Walther said in the statement.
Allianz Life is already selling several fee-based annuities, and it is already working with DPL Financial Partners and other organizations to offer fee-based annuities to RIAs.
Why Letter Ruling News Is Dribbling Out
The IRS issues private letter rulings on a confidential basis. One taxpayer isn’t supposed to use another taxpayer’s private letter ruling to justify using a tax break.
The IRS eventually strips identifying information off of private letter rulings and posts the anonymized versions on its website.
The IRS has not yet posted any versions, anonymized or otherwise, of the annuity advisory fee letter rulings.
— Read 7 Things to Know About IRS Private Letter Rulings, on ThinkAdvisor.
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