534 / How is expected return on a non-variable annuity computed under the annuity rules?

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 546).¹

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.²

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.³