Internal Revenue Code:Sec. 2039. Annuities
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle B - Estate and Gift Taxes
CHAPTER 11 - ESTATE TAX
Subchapter A - Estates of Citizens or Residents
PART III - GROSS ESTATE
Statute
Sec. 2039. Annuities
(a) General
The gross estate shall include the value of an annuity or other
payment receivable by any beneficiary by reason of surviving the
decedent under any form of contract or agreement entered into after
March 3, 1931 (other than as insurance under policies on the life
of the decedent), if, under such contract or agreement, an annuity
or other payment was payable to the decedent, or the decedent
possessed the right to receive such annuity or payment, either
alone or in conjunction with another for his life or for any period
not ascertainable without reference to his death or for any period
which does not in fact end before his death.
(b) Amount includible
Subsection (a) shall apply to only such part of the value of the
annuity or other payment receivable under such contract or
agreement as is proportionate to that part of the purchase price
therefor contributed by the decedent. For purposes of this
section, any contribution by the decedent's employer or former
employer to the purchase price of such contract or agreement
(whether or not to an employee's trust or fund forming part of a
pension, annuity, retirement, bonus or profit sharing plan) shall
be considered to be contributed by the decedent if made by reason
of his employment.
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 384; Pub. L. 85-866, title I,
Sec. 23(e), 67(a), Sept. 2, 1958, 72 Stat. 1622, 1658; Pub. L.
87-792, Sec. 7(i), Oct. 10, 1962, 76 Stat. 830; Pub. L. 89-365,
Sec. 2(a), Mar. 8, 1966, 80 Stat. 33; Pub. L. 91-172, title I, Sec.
101(j)(23), Dec. 30, 1969, 83 Stat. 528; Pub. L. 92-580, Sec. 2(a),
Oct. 27, 1972, 86 Stat. 1276; Pub. L. 93-406, title II, Sec.
2007(b)(4), Sept. 2, 1974, 88 Stat. 994; Pub. L. 94-455, title XX,
Sec. 2009(c)(1)-(3), Oct. 4, 1976, 90 Stat. 1894, 1895; Pub. L.
95-600, title I, Sec. 142(a), (b), 156(c)(4), title VII, Sec.
702(j)(1), Nov. 6, 1978, 92 Stat. 2796, 2803, 2931; Pub. L. 96-222,
title I, Sec. 101(a)(8)(B), Apr. 1, 1980, 94 Stat. 201; Pub. L.
97-34, title III, Sec. 311(d)(1), (h)(4), 313(b)(3), Aug. 13, 1981,
95 Stat. 280, 282, 286; Pub. L. 97-248, title II, Sec. 245(a), (b),
Sept. 3, 1982, 96 Stat. 524; Pub. L. 97-448, title I, Sec.
103(c)(9), Jan. 12, 1983, 96 Stat. 2377; Pub. L. 98-369, div. A,
title IV, Sec. 491(d)(34), title V, Sec. 525(a), July 18, 1984, 98
Stat. 851, 873; Pub. L. 99-514, title XVIII, Sec. 1848(d),
1852(e)(1)(A), Oct. 22, 1986, 100 Stat. 2857, 2868.)
Miscellaneous
AMENDMENTS
1986 - Subsec. (c). Pub. L. 99-514, Sec. 1852(e)(1), struck out
subsec. (c) which provided an exclusion from gross estate of
certain annuity interests created by community property laws.
Subsec. (e). Pub. L. 99-514, Sec. 1848(d), struck out ''or a bond
described in paragraph (3)'' after ''an annuity described in
paragraph (2)'' in concluding provisions as such provisions were
applicable to obligations issued after Dec. 31, 1983, and prior to
repeal of subsec. (e) by Pub. L. 98-369, Sec. 525(a), see Effective
Date of 1984 Amendment note below.
1984 - Subsec. (c). Pub. L. 98-369, Sec. 525(a), substituted
provisions relating to exception of certain annuity interests
created by community property laws for provisions which related to
exemption of annuities under certain trusts and plans.
Subsec. (d). Pub. L. 98-369, Sec. 525(a), struck out subsec. (d)
which related to exemption of certain annuity interests created by
community property laws. See subsec. (c) of this section.
Subsec. (e). Pub. L. 98-369, Sec. 525(a), struck out subsec. (e)
which related to exclusion of individual retirement accounts.
Pub. L. 98-369, Sec. 491(d)(34), inserted ''or'' at end of par.
(1), substituted a period for '', or'' at end of par. (2), struck
out par. (3) which excluded from the value of the gross estate the
value of an annuity receivable by any beneficiary, other than the
executor, under a retirement bond described in section 409(a), and
substituted in provision following par. (2) ''or 408(d)(3)'' for
''405(d)(3), 408(d)(3), or 409(b)(3)(C)'', and substituted ''or
annuity'' for '', annuity, or bond'' wherever appearing.
Subsecs. (f), (g). Pub. L. 98-369, Sec. 525(a), struck out
subsec. (f) which related to lump sum distributions and an
exception where the recipient elects not to take 10-year averaging,
and subsec. (g) which related to a $100,000 limitation on the
exclusions under subsecs. (c) and (e).
1983 - Subsec. (f)(1). Pub. L. 97-448, Sec. 103(c)(9)(A),
designated existing provisions as subpar. (A), substituted
''without regard to the third sentence of section 402(e)(4)(A))''
for ''without regard to the next to the last sentence of section
402(e)(4)(A)'' in subpar. (A) as so designated, and added subpar.
(B).
Subsec. (f)(2). Pub. L. 97-448, Sec. 103(c)(9)(B), substituted
''An amount described'' for ''A lump sum distribution described''.
1982 - Subsec. (c). Pub. L. 97-248, Sec. 245(b), substituted
''Subject to the limitation of subsection (g), notwithstanding any
other provision of this section'' for ''Notwithstanding the
provisions of this section''.
Subsec. (e). Pub. L. 97-248, Sec. 245(b), substituted ''Subject
to the limitation of subsection (g), notwithstanding any other
provision of this section'' for ''Notwithstanding the provisions of
this section''.
Subsec. (g). Pub. L. 97-248, Sec. 245(a), added subsec. (g).
1981 - Subsec. (c). Pub. L. 97-34, Sec. 311(d)(1), provided that
for purposes of subsec. (c), any deductible employee contributions,
within the meaning of par. (5) of section 72(o), shall be
considered as made by a person other than the decedent.
Subsec. (e). Pub. L. 97-34, Sec. 313(b)(3), inserted reference to
rollover contribution described in section 405(d)(3).
Pub. L. 97-34, Sec. 311(h)(4), substituted ''section 219'' for
''section 219 or 220''.
1980 - Subsec. (f)(2). Pub. L. 96-222 substituted ''(without the
application of paragraph (2) thereof), except to the extent that
section 402(e)(4)(J) applies to such distribution'' for ''without
the application of paragraph (2) thereof''.
1978 - Subsec. (c). Pub. L. 95-600, Sec. 142(a), substituted
''(other than an amount described in subsection (f))'' for ''(other
than a lump sum distribution described in section 402(e)(4),
determined without regard to the next to the last sentence of
section 402(e)(4)(A))'' in provisions preceding par. (1).
Subsec. (e). Pub. L. 95-600, Sec. 156(c)(4), 702(j)(1), inserted
''section 403(b)(8) (but only to the extent such contribution is
attributed to a distribution from a contract described in
subsection (c)(3)),'' after ''403(a)(4)'' and inserted ''or 220''
after ''section 219'' wherever appearing in provisions following
par. (3).
Subsec. (f). Pub. L. 95-600, Sec. 142(b), added subsec. (f).
1976 - Subsec. (c). Pub. L. 94-455, Sec. 2009(c)(2), (3),
substituted ''other payment (other than a lump sum distribution
described in section 402(e)(4), determined without regard to the
next to the last sentence of section 402(e)(4)(A)) receivable by
any beneficiary'' for ''other payment receivable by any
beneficiary'' in provisions preceding par. (1) and substituted
''For purposes of this subsection, contributions or payments on
behalf of the decedent while he was an employee within the meaning
of section 401(c)(1) made under a trust or plan described in
paragraph (1) or (2) shall, to the extent allowable as a deduction
under section 404, be considered to be made by a person other than
the decedent and, to the extent not so allowable, shall be
considered to be made by the decedent'' for ''For purposes of this
subsection, contributions or payments on behalf of the decedent
while he was an employee within the meaning of section 401(c)(1)
made under a trust or plan described in paragraph (1) or (2) shall
be considered to be contributions or payments made by the
decedent'' in provisions following par. (4).
Subsec. (e). Pub. L. 94-455, Sec. 2009(c)(1), added subsec. (e).
1974 - Subsec. (c). Pub. L. 93-406 inserted reference to section
1452(d) in provisions following par. (4).
1972 - Subsec. (d). Pub. L. 92-580 added subsec. (d).
1969 - Subsec. (c)(3). Pub. L. 91-172 substituted ''section
170(b)(1)(A)(ii) or (vi), or which is a religious organization
(other than a trust),'' for ''section 503(b) (1), (2), or (3),''.
1966 - Subsec. (c). Pub. L. 89-365 added par. (4), inserted
reference to chapter 73 of title 10 of the United States Code in
the enumeration of the plans and contracts set out in the
prohibition against allowance of exclusion for that part of the
value of the amount payable under the plan or contract in the
proportion that the total payments or contributions made by the
decedent bear to the total payments or contributions made, and
provided that, for purposes of this section, amounts payable under
chapter 73 of title 10 are attributable to payments or
contributions made by the decedent only to the extent of amounts
deposited by him pursuant to section 1438 of title 10.
1962 - Subsec. (c). Pub. L. 87-792 substituted ''was a plan
described in section 403(a)'' for ''met the requirements of section
401(a)(3), (4), (5), and (6)'' in par. (2), and inserted sentence
providing, for purposes of this subsection, that contributions or
payments on behalf of the decedent while he was an employee within
the meaning of section 401(c)(1) made under a trust or plan
described in paragraph (1) or (2) shall be considered to be
contributions or payments made by the decedent.
1958 - Subsec. (c)(2). Pub. L. 85-866, Sec. 67(a), inserted
''(4), (5), and (6)'' after ''section 401(a)(3)''.
Subsec. (c)(3) and closing sentences. Pub. L. 85-866, Sec.
23(e), added par. (3), inserted ''or under contract described in
paragraph (3)'' in second sentence of subsec. (c) and substituted
''paragraph (1) or (2) shall not be considered to be contributed by
the decedent, and contributions or payments made by the decedent's
employer or former employer toward the purchase of an annuity
contract described in paragraph (3) shall, to the extent excludable
from gross income under section 403(b),'' for ''this subsection
shall'' in third sentence of subsec. (c).
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1852(e)(1)(B) of Pub. L. 99-514 provided that: ''The
amendment made by subparagraph (A) (amending this section) shall
apply to estates of decedents dying after the date of the enactment
of this Act (Oct. 22, 1986).''
Amendment by section 1848(d) of Pub. L. 99-514 effective, except
as otherwise provided, as if included in the provisions of the Tax
Reform Act of 1984, Pub. L. 98-369, div. A, to which such
amendment relates, see section 1881 of Pub. L. 99-514, set out as a
note under section 48 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 491(d)(34) of Pub. L. 98-369 applicable to
obligations issued after Dec. 31, 1983, see section 491(f)(1) of
Pub. L. 98-369, set out as a note under section 62 of this title.
Section 525(b)(1), (2), (4) of Pub. L. 98-369, as amended by Pub.
L. 99-514, title XVIII, Sec. 1852(e)(3), Oct. 22, 1986, 100 Stat.
2868, provided that:
''(1) In general. - The amendments made by this section (amending
this section) shall apply to the estates of decedents dying after
December 31, 1984.
''(2) Exception for participants in pay status. - The amendments
made by this section shall not apply to the estate of any decedent
who -
''(A) was a participant in any plan who was in pay status on
December 31, 1984, and
''(B) irrevocably elected the form of the benefit before the
date of the enactment of this Act (July 18, 1984).
''(4) Irrevocable election. - For purposes of paragraph (2) (set
out above) and section 245(c) of the Tax Equity and Fiscal
Responsibility Act of 1982 (see Effective Date of 1982 Amendment
note below), an individual who -
''(A) separated from service before January 1, 1985, with
respect to paragraph (2), or January 1, 1983, with respect to
section 245(c) of the Tax Equity and Fiscal Responsibility Act of
1982, and
''(B) meets the requirements of such paragraph or such section
other than the requirement that there be an irrevocable election,
and that the individual be in pay status,
shall be treated as having made an irrevocable election and as
being in pay status within the time prescribed with respect to a
form of benefit if such individual does not change such form of
benefit before death.''
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise
provided, as if it had been included in the provision of the
Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT
Section 245(c) of Pub. L. 97-248, as amended by Pub. L. 98-369,
div. A, title V, Sec. 525(b)(3), July 18, 1984, 98 Stat. 874,
provided that: ''The amendments made by this section (amending this
section) shall apply to the estates of decedents dying after
December 31, 1982, except that such amendments shall not apply to
the estate of any decedent who was a participant in any plan who
was in pay status on December 31, 1982, and irrevocably elected
before January 1, 1983, the form of benefit.''
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by section 311(d)(1), (h)(4) of Pub. L. 97-34
applicable to taxable years beginning after Dec. 31, 1981, see
section 311(i)(1) of Pub. L. 97-34, set out as a note under section
219 of this title.
Amendment by section 313(b)(3) of Pub. L. 97-34 applicable to
redemptions after Aug. 13, 1981, in taxable years ending after such
date, see section 313(c) of Pub. L. 97-34, set out as a note under
section 219 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-222 applicable with respect to the
estates of decedents dying after Apr. 1, 1980, see section
101(b)(1)(D) of Pub. L. 96-222, set out as a note under section 691
of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 142(c) of Pub. L. 95-600 provided that: ''The amendments
made by this section (amending this section) shall apply with
respect to the estates of decedents dying after December 31,
1978.''
Amendment by section 156(c)(4) of Pub. L. 95-600 applicable to
distributions or transfers made after Dec. 31, 1977, in taxable
years beginning after such date, see section 156(d) of Pub. L.
95-600, set out as a note under section 403 of this title.
Section 702(j)(3)(A) of Pub. L. 95-600 provided that: ''The
amendment made by paragraph (1) (amending this section) shall apply
to the estates of decedents dying after December 31, 1976.''
EFFECTIVE DATE OF 1976 AMENDMENT
Section 2009(e)(3)(A) of Pub. L. 94-455 provided that: ''The
amendments made by paragraphs (1), (2), and (3) of subsection (c)
(amending this section) shall apply to the estates of decedents
dying after December 31, 1976.''
EFFECTIVE DATE OF 1974 AMENDMENT
Amendment by Pub. L. 93-406 applicable to taxable years ending on
or after Sept. 21, 1972, with respect to individuals dying on or
after Sept. 21, 1972, see section 2007(c) of Pub. L. 93-406, set
out as a note under section 122 of this title.
EFFECTIVE DATE OF 1972 AMENDMENT
Section 2(b) of Pub. L. 92-580, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
amendment made by subsection (a) (amending this section) shall
apply with respect to estate of decedents for which the period
prescribed by the Internal Revenue Code of 1986 (formerly I.R.C.
1954) for filing of a claim for credit or refund of an overpayment
of estate tax ends on or after the date of enactment of this Act
(Oct. 27, 1972). No interest shall be allowed or paid on any
overpayment of estate tax resulting from the application of the
amendment made by subsection (a) for any period prior to the
expiration of the one hundred and eightieth day following the date
of the enactment of this Act.''
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 effective Jan. 1, 1970, see section
101(k)(1) of Pub. L. 91-172, set out as an Effective Date note
under section 4940 of this title.
EFFECTIVE DATE OF 1966 AMENDMENT
Section 2(c) of Pub. L. 89-365 provided that: ''The amendments
made by subsection (a) (amending this section) shall apply with
respect to decedents dying after December 31, 1965. The amendments
made by subsection (b) (amending section 2517 of this title) shall
apply with respect to calendar years after 1965.''
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-792 applicable to taxable years beginning
after Dec. 31, 1962, see section 8 of Pub. L. 87-792, set out as a
note under section 22 of this title.
EFFECTIVE DATE OF 1958 AMENDMENT
Amendment by section 23(e) of Pub. L. 85-866 applicable with
respect to estates of decedents dying after Dec. 31, 1957, see
section 23(g) of Pub. L. 85-866, set out as a note under section
403 of this title.
Section 67(b) of Pub. L. 85-866 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply with
respect to estates of decedents dying after December 31, 1953.''
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI (Sec. 1101-1147 and 1171-1177) or title
XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment to
any plan, such plan amendment shall not be required to be made
before the first plan year beginning on or after Jan. 1, 1989, see
section 1140 of Pub. L. 99-514, as amended, set out as a note under
section 401 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 406, 407, 2045, 2056,
6324 of this title.
