To amend the Internal Revenue Code of 1986 to provide for 10-year basis recovery in the case of annuities under governmental plans.

Amends Internal Revenue Code provisions relating to the exclusion ratio, permitting a ten-year basis recovery for amounts received as annuities under governmental plans.

 
HR 805 IH
101st CONGRESS
1st Session
 H. R. 805
To amend the Internal Revenue Code of 1986 to provide for 10-year basis
recovery in the case of annuities under governmental plans.
IN THE HOUSE OF REPRESENTATIVES
February 2, 1989
Mr. MOODY introduced the following bill; which was referred to the Committee
on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide for 10-year basis
recovery in the case of annuities under governmental plans.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled, That (a) paragraph (1) of section
  72(b) of the Internal Revenue Code of 1986 (relating to exclusion ratio)
  is amended to read as follows:
  `(1) EXCLUSION-
  `(A) IN GENERAL- Except as provided in subparagraph (B), gross income does
  not include that part of any amount received as an annuity under an annuity,
  endowment, or life insurance contract which bears the same ratio to such
  amount as the investment in the contract (as of the annuity starting date)
  bears to the expected return under the contract (as of such date).
  `(B) 10-YEAR BASIS RECOVERY FOR GOVERNMENTAL PLANS-
  `(i) IN GENERAL- Gross income for any taxable year does not include amounts
  received as an annuity under a governmental plan to the extent that the
  aggregate amount so received during the taxable year does not exceed the
  portion of the investment in the contract allocated under clause (ii)
  to months beginning in such taxable year.
  `(ii) ALLOCATION- For purposes of clause (i), the investment in the contract
  (as of the annuity starting date) shall be allocated ratably to months in
  the 10-year period beginning on the annuity starting date. If the amount
  so allocated to months beginning in any taxable year exceeds the amount
  received as an annuity under the governmental plan during such taxable
  year, such excess shall be treated as allocated to months beginning in
  the succeeding taxable year.
  `(iii) GOVERNMENTAL PLAN- For purposes of this paragraph, the term
  `governmental plan' means any plan established and maintained for its
  employees by the Federal Government, any State or local government, or
  any agency or instrumentality of any of the foregoing.
  `(iv) COORDINATION WITH SUBPARAGRAPH (A)- Subparagraph (A) shall not
  apply to any amount received under a governmental plan unless the taxpayer
  elects to have this subparagraph not apply to amounts received under such
  plan. Such an election, once made, shall be irrevocable.'
  (b) The amendment made by subsection (a) shall apply to amounts received
  in taxable years ending after July 1, 1986, but only in cases where the
  annuity starting date is after such date.