Part III. Administrative, Procedural, and Miscellaneous

taking the holding or rationale of Rev. Rul. 81–225 into account, and no contributions are made on behalf of any individual who was not included under the contract on or before September 25, 1981.

In Rev. Rul. 82–54, 1982–1 C.B. 11, a variable annuity contract holder can direct that the consideration paid for the contracts be invested in any or all of three non-publicly-available mutual funds managed by the insurance company. Each of the funds has a different general investment strategy. One fund invests primarily in common stocks, another in bonds, and the third in money market instruments. A contract holder is free to allocate payments among the three funds and to reallocate account values among the three funds at any time before the annuity starting date. The ruling concludes that the contract holder’s ability to choose among broad general investment strategies, either at the time of the initial purchase of the annuity contract or subsequent thereto, does not constitute sufficient control over individual investment decisions so as to cause the contract holder to be the owner of the mutual fund shares.

Rev. Rul. 82–55, 1982–1 C.B. 12, clarifies that, if an annuity contract holder’s premiums are invested in a separate account that holds mutual fund shares and the mutual fund’s shares were originally available to the public but are unavailable to the public when the contract holder’s premiums are invested, then the contract holder is not treated as the owner of the mutual fund shares.

In Christofferson v. United States, 749 F.2d 513 (8th Cir. 1984), an individual purchased a purported deferred “annuity” contract that permitted the contract holder to allocate the consideration paid for the contract among various mutual funds. The contract holder could reallocate funds among the mutual funds at any time, and could withdraw part or all of the funds with seven days notice. The contract also gave the contract holder an option to purchase an immediate life annuity at guaranteed rates. The contract holder did not have to exercise the option. The court found that the contract holder had surrendered few of the rights of ownership or control over the assets, and therefore con

26 CFR 601.201: Rulings and determination letters. (Also sections 61, 403(a), 403(b), 408(b), 817(h), 818(a); 1.61–1, 1.403(a)–1, 1.403(b)–1, 1.408–1, 1.817–5, 1.818–2)

Rev. Proc. 99–44