PPLI Abuse Act

This bill changes federal tax rules for private placement life insurance and annuity contracts, which are investment-linked policies sold only to buyers who meet income, asset, education, or license requirements. Unless the investment account behind such a contract supports at least 25 unrelated contracts in equal shares, the contract would no longer be treated as insurance or an annuity for tax purposes. Holders of these contracts would be taxed each year on their share of the account's income, and payouts above what they paid in would be taxed as ordinary income. Existing contracts could avoid the new rules if exchanged, converted, or cancelled within 180 days of enactment. Insurers would have to report these contracts to the IRS, with a penalty of $1,000,000 plus $1,000,000 for each additional 30 days a required initial report is late.

Full text and official record on Congress.gov

Sponsors

• Ron Wyden Democrat sponsor
• 0 cosponsors