Reg. § 1.817A-1 Certain modified guaranteed contracts.
(a) Definitions
(1) Modified guaranteed contract The term modified guaranteed contract (MGC) is defined in section as an annuity, life insurance, or pension plan contract (other than a variable contract described in section ) under which all or parts of the amounts received under the contract are allocated to a segregated account. Assets and reserves in this segregated account must be valued from time to time with reference to market values for annual statement purposes. Further, an MGC must provide either for a net surrender value or for a policyholder's fund (as defined in section ). If only a portion of a contract is not described in section , such portion is treated as a separate contract for purposes of applying section .
(2) Temporary guarantee period An MGC may temporarily guarantee a return other than the permanently guaranteed crediting rate for a period specified in the contract (the temporary guarantee period). During the temporary guarantee period, the amount paid to the policyholder upon surrender is usually increased or decreased by a market value adjustment, which is determined by a formula set forth under the terms of the MGC.
(3) Equity-indexed modified guaranteed contract An equity-indexed MGC is an MGC, as defined in of this section, that provides a return during or at the end of the temporary guarantee period based on the performance of stocks, other equity instruments, or equity-based derivatives.
(4) Non-equity-indexed modified guaranteed contract A non-equity-indexed MGC is an MGC, as defined in of this section, that provides a return during or at the end of the temporary guarantee period not based on the performance of stocks, other equity instruments, or equity-based derivatives.
(b) Waiver of section 811(d) for certain non-equity-indexed modified guaranteed contracts Section is waived during the temporary guarantee period when applied to non-equity-indexed MGCs.
(c) Applicability dates of this section applies to taxable years beginning after October 13, 2020. However, a taxpayer may choose to apply the rules of of this section for a taxable year beginning after December 31, 2017, the effective date of the revision of section by Public Law 115-97, and on or before October 13, 2020, provided the taxpayer consistently applies the rules of of this section to that taxable year and all subsequent taxable years. See section . For taxable years beginning on or before October 13, 2020, see of this section as contained in 26 CFR part 1 revised as of April 1, 2020.
[T.D. 9058, 68 FR 24350, May 7, 2003, as amended by T.D. 9911, 85 FR 64394, Oct. 13, 2020]