Determining Whether an Annuity (Purchased After 02/08/2006) is Actuarially Sound

Determining Whether an Annuity (Purchased After 02/08/2006) is Actuarially Sound A determination must be made on whether the purchase of annuities, other than qualifying IRS annuities, is treated as a transfer of assets for less than fair market value. A. If the expected return on the annuity is commensurate with a reasonable estimate of the life expectancy of the annuitant, the annuity can be deemed actuarially sound. The life expectancy tables published by the Office of the Actuary of the Security Administration are used. B. The average number of years of expected life remaining for the individual must coincide with the life of the annuity. If the individual is not reasonably expected to live longer than the guarantee period of the annuity, the individual will not receive fair market value of the annuity based on the projected return. C. If this is the case, the annuity is not actuarially sound and a transfer of assets for less than fair market value has taken place, subjecting the individual to a penalty. D. The penalty is assessed based on a transfer of assets that is considered to have occurred at the time the annuity was purchased, using the full purchase price as the amount transferred.