REQUIRED: Product & Service Notice IRC Section 7702 Transition Guidelines

PS4304 – IRC Section 7702 Transition Guidelines 

The Consolidated Appropriations Act, which was passed in late December and went into effect on Jan. 1, 2021, allows a new minimum interest rate assumption for the life insurance cash value accumulation test (CVAT) and guideline premium test (GPT). These rates have long been set at 4% and 6%. These new rates allow more premiums to be placed in permanent life insurance without violating these tests or creating a modified endowment contract (MEC). Ameritas will begin transition for these new rates on all variable universal, index universal and universal life insurance products on June 14, 2021. The new survivor index universal life insurance product, launched in May with new rates, so there are no necessary changes. For 7702 purposes, the applicable rates in our whole life products will continue to be based on the contract rate. Watch for changes to our whole life products later this year. Please review the guidelines for more information.