Pacific Life Receives Favorable Private Letter Ruling for Nonqualified Annuity Contracts

Business Wire

Internal Revenue Service rules that advisory fees withdrawn from non-qualified annuity contracts will no longer prompt a taxable event for contract owners

NEWPORT BEACH, Calif.--(BUSINESS WIRE)-- Pacific Life has received a favorable private letter ruling (PLR) from the IRS allowing for advisory fees to be withdrawn from a non-qualified annuity contract without prompting a taxable event. According to the PLR, advisory fees taken from non-qualified fee-based annuities, such as Pacific Odyssey®, will not result in a taxable event to the contract owner as long as the annual fee does not exceed 1.5% of the annuity’s cash value and is payable to the financial professional for the relevant contract only. This marks an important divergence from the previous IRS view, which outlined an adverse ruling in 1993.

“As more retirees prioritize protected lifetime income and become more aware of annuities as a solution, it is vital we find ways to support that demand,” says Doug Mantelli, vice president of registered investment adviser (RIA) strategy for Pacific Life’s Retirement Solutions Division. “This ruling will smooth the path for RIAs and fee-based advisors to include non-qualified annuities in retirees’ portfolios and to meet the overall needs of their clients.”

While advisory business is not new to Pacific Life, the company is actively expanding its distribution strategy by dedicating additional resources to meet the unique needs of RIAs and the clients they serve. The prioritization of product and resource development, technological integrations, and new distribution relationships, supports Pacific Life’s growth in the industry’s fastest-growing advice channel and reflects its belief that annuities can be beneficial to the retirement planning process.

About Pacific Life

For more than 150 years, Pacific Life has helped millions of individuals and families with their financial needs through a wide range of life insurance products, annuities, and mutual funds, and offers a variety of investment products and services to individuals, businesses, and pension plans. Whether your goal is to protect loved ones or grow your assets for retirement, Pacific Life offers innovative products and services that provide value and financial security for current and future generations. Pacific Life counts more than half of the 100 largest U.S. companies as its clients and has been named one of the 2019 World’s Most Ethical Companies® by the Ethisphere Institute. For additional company information, including current financial strength ratings, visit www.PacificLife.com.

Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Client count as of June 2019 is compiled by Pacific Life using the 2019 FORTUNE 500^® list.