The former owner of a variable annuity written by Merrill Lynch Life Insurance Co. in 1993 is suing over how the company now administering the contract — Transamerica Life Insurance Co. — handled premium tax costs.
Barry Katz, a Pennsylvania resident, owned a Merrill Lynch Investor Choice Annuity, IRA Series annuity contract.
Transamerica Life, a subsidiary of Aegon, became responsible for administering the contract in 2007, after Aegon acquired Merrill Lynch Life.
The contract calls for Transamerica Life to deduct charges for premium taxes "at the annuity date," according to a complaint Katz filed in June in the U.S. District Court for the Eastern District of Pennsylvania.
The "annuity date" for the annuity is Nov. 1, 2036, Katz surrendered the annuity on July 16, 2024, and Transamerica Life deducted $603.27 for premium taxes from the annuity's variable account, Katz told the court.
The surrender date was "well before the annuity date," according to Katz. "Given that contract holders can only surrender the variable annuity contract prior to the annuity date, any contract holder that surrenders their contract should not ever be charged for premium taxes."
Katz has accused Transamerica Life of breach of contract.
Katz is seeking court permission to represent a class of "thousands or tens of thousands" of purchasers of the same contract who surrendered their annuities before the annuity date and were charged for premium taxes.
He hopes to recover actual damages, punitive damages, other damages, interest, and attorneys' fees, costs and expenses.
District Judge Joel Slomsky signed an order giving Transamerica Life until Sept. 2 to respond.
Representatives for Katz could not immediately be reached for comment. Transamerica Life declined to comment on pending litigation.
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