Industry News

What You Need to Know...When You Need It.

At IPS Advisors, we pride ourselves in keeping our clients informed with timely updates and news to help them navigate and understand the complex regulatory landscape of all aspects of Life Insurance Portfolio Management. We provide the following examples of valuable industry information at your fingertips:

• AALU Washington Report: Proceeds of Life Insurance Receivable By Partnership On Insured’s Death Are Not Includible In Gross Estate of Insured
  The Revenue Service, in PLR 200947006, PLR 200948001 and PLR 2200949004, has ruled that the proceeds of two whole life insurance policies received by a limited partnership on an insured's death will not be includible in the insured's gross estate under sections 2042 and 2035 of the Internal Revenue Code, even if the individual dies within three years of releasing his powers over one of the policies.
• Is My Insurance Policy Protected?
• Washington Report 09-39, General Estate and Gift Tax Developments: February 2009
  This Washington Report summarizes a few of the more important cases and rulings in the estate and gift tax areas which were decided or reported by the courts and the Internal Revenue Service in February of 2009, and on which have not previously been reported in Bulletins on insurance-related estate and gift tax matters.
• AALU Memo: Estate Tax Amendments Passed in Senate FY2010
• Washington Report 09-36, Senate Finance Committee Chair Introduces Legislation Which Would Freeze 2009 Estate Tax & Reunify Gift and Estate Tax Exemptions
  Senate Finance Committee Chairman Max Baucus (D-MT) today introduced legislation which would make permanent many of the tax cuts enacted in 2001. Particularly notable to AALU members and their clients, the bill would make permanent the estate tax levels ($3.5 million exemption/45% top rate) in effect in 2009; index the exemption for inflation; provide so-called "portability"; and would unify estate and gift tax exemption levels at $3.5 million. AALU has been the principal advocate for estate and gift tax reunification because it would greatly simplify estate planning and help clients by removing an artificial and harmful barrier that discourages earlier intergenerational transfers. There is considerable work to be done, but the introduction of this legislation represents significant progress toward AALU's goal of reasonable, sustainable estate tax reform that will enable clients to plan with certainty.
• AALU Washington Report: IRS Issues Significant New COLI Guidance on Revenue Code Sections 101(j) and 6039I
  The Internal Revenue Service has issued Notice 2009-48 to provide significant new guidance under Revenue Code sections 101(j) and 6039I which address the tax treatment and impose annual reporting requirements for employer-owned life insurance contracts, more commonly referred to as corporate-owned life insurance or COLI. Section 101(j) provides that any death proceeds paid under an "employer-owned life insurance contract" generally are not excludible from taxable income under section 101(a) unless specific notice and consent requirements are satisfied and certain exceptions apply. In addition, under section 6039I every "applicable policyholder" that owns an employer-owned life insurance contract must file an annual return with the IRS on Form 8925. Sections 101(j) and 6039I were added by the Pension Protection Act of 2006. Since their enactment, there have been many questions regarding the scope of the new rules and other compliance matters. AALU has been actively seeking additional guidance from the Revenue Service on many of these issues and Notice 2009-48 was issued, at least in part, in response to those efforts.
• AALU has lobbied Congress on the estate tax for nearly a decade. We now face another critical juncture as Congress will need to act to prevent repeal in 2010. AALU believes that a one-year extension of current law ($3.5M exemption, 45% rate) is an increasingly likely outcome in 2009, with the decision on permanent reform moving into next year as lawmakers address tax reform and other expiring tax cuts. That being said, we feel our prospects for reunification remain very strong - it has been included in three of the four leading estate tax bills in the 111th Congress, represents sound tax policy, and we are actively educating lawmakers beyond the rate and exemption, on such important technical features.