Transamerica Says It Has One of the Advisory Fee Letter Rulings

Transamerica revealed Thursday that it’s one of the life insurers that now has a private letter ruling on annuity advisory fees from the Internal Revenue Service.

The letter ruling lets Transamerica offer annuity holders a streamlined mechanism for paying advisory fees from the annuity assets, without creating tax headaches.

“In light of the private letter ruling, Transamerica plans to offer fee-friendly annuity benefits in 2020,” the company said.

(Related: Pacific Life Also Has an Advisory Fee Letter Ruling)

The IRS private letter ruling program gives taxpayers a way to get interpretations of the tax rules from the IRS.

The IRS posts anonymized versions of the rulings on the web. One taxpayer cannot rely on the interpretation in another taxpayer’s letter ruling. Each taxpayers needs to get its own ruling.

The IRS released several annuity advisory fee letter rulings this past summer and more this fall.

In addition to Transamerica, the other companies that have reported receiving annuity advisory fee letter rulings are Allianz Life, Great American Life, Lincoln Financial, Nationwide Mutual and Pacific Life.

It’s not clear whether each of those companies has received just one letter for the entire organization, or if some have received separate letters that apply to two or more insurance company subsidiaries or sister companies.

Transamerica says the private letter ruling it received applies to variable annuities, indexed annuities and hybrid annuities issued by Transamerica Life Insurance Company, Transamerica Financial Life Insurance Company, and Transamerica Corporation..

The advisory fees eligible for the new tax treatment cannot exceed an annual rate of 1.5% of a client’s annuity contract value, Transamerica says.

— Read IRS Rules for Nationwide and Lincoln on Annuity Advisory Fees, on ThinkAdvisor.

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