Why do the Survivors Have A Preferred Taxable Income?
Private Letter Ruling # 9717033 dated April 30, 1997, indicates that the ‘income’ (monthly income benefit) received from a reversionary Life Income Annuity will be treated, for income tax purposes, similarly to the proceeds of a lump-sum life insurance benefit converted to a monthly settlement option. A private letter ruling is not a binding precedent. However, we anticipate that the IRS will continue to act consistently with the principles laid out in PRL # 9717033.
