- quote -

You can avoid that tax (modest, since it's just on part of premium)
by assigning a charity as the beneficiary of the above 50k portion,
if your company allows it. Guidestar.org shows a zillion candidates
of worthy to wacky eligible charities.

"Brent D. Gardner, ChFC" <bgardner20[at]cox.net> wrote in
message news:7jnRb.83$ay1.32[at]okepread05


Somewhere in my past, I was a captive agent for Prudential, & in those
- quote -


You are being Income Taxed on the PREMIUM ONLY, for that portion of the coverage that EXCEEDS
$50,000. Look under Sec 79 IRC.
Cal Lester CLU

<kellingsNOSPAM[at]commspeed.net> wrote in message
news:40157768.27013796[at]news.commspeed.net...
- quote -

Premiums paid for group term life insurance, when paid by the employer, are
generally tax deductible, and benefits remain income tax free. There are
exceptions, such as if the plan is to fund a buy/sell agreement, or if the
insured is a shareholder who owns more than 2% of an S Corp that is paying
the premium.

If the plan meets the definintion of group insurance (some plans fail, upon
examination), then the premium paid by an emloyer for the first $50,000 of
death benefits on the employee are not taxable to the employee as
compensation, but the premium for amounts in excess of this limit ARE
taxable as compensation, under IRS Table I rates, which are imputed costs
per thousand of protection at various ages.

At older ages, and larger face amounts, Table I rates are generally higher
(a LOT higher) than the true cost of coverage, which creates a problem
(especially if the tax is more than the cost of buying stand alone
coverage!). The solution is a Group Carve Out plan, which can create some
subtle tax leverage, plus give the highly compensated an additional benefit
of permanent insurance for a fraction of the cost when purchased on their
own.

If you pay the premium for life insurance, via salary reduction, it is
generally not deductible. If the employer subsidizes your purchase, then you
receive an economic benefit to the extent of the subsidy, which can trigger
some phantom income on a W-2.

I have clients who find out they are going to pay a tax on group insurance
paid for by their employer AND they also purchased addtional coverage
through the same plan, and it is not uncommon for there to be some confusion
between the two.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

kellingsNOSPAM[at]commspeed.net, you asked:

<< <I> Somewhere in my past, I was a captive agent for Prudential, & in those
days, life insurance was one of the last sacred things, "tax man, stay away..."
just got a memo today from the place of employment (healthcare provider)
stating that we are being taxed on life insurance we buy as employees, if face
value is > 50k now, it's been many years since i worked in the industry, but,
doesn't that sound strange?</I> >
Yes, it does sound strange. I am in the life insurance industry and try to
keep my ears close to the ground to hear about changes that may occur. But I
haven't heard anything that has changed this in this way.

<< <I> I'm paying for the policy - yes its probably at a great premium... but
they are taxing me - on the face amount??? </I> >
Hmmmm??? Well, I don't think they're taxing you just yet. <VBG
<< <I> any opinions? can someone lite the way for me here? ever heard of this?
should I ask a lawyer? sounds really bogus to me..... </I> >
Unless the law has changed recently, it pretty much follow the same kind of
rule that disability follows where if the employer pays the premium (this is
for amounts > $50k of group coverage), then the death benefit is taxable. But
if YOU are actually paying for the coverage and you're employer is not
reimbursing you in some way, the death benefit would not be taxable. I feel
pretty certain the laws remains this way.

<kellingsNOSPAM[at]commspeed.net> wrote in message
news:40157768.27013796[at]news.commspeed.net...
- quote -


It's been this way for years.

kellingsNOSPAM[at]commspeed.net wrote:
- quote -

Premiums paid for group-term LI are taxable if the policy value is
greater than $50k. The tax isn't based on the face value though, it's
essentially the amount of the premium that covers the excess over $50k,
based on some IRS formulas.

-Tad

Hi!
Somewhere in my past, I was a captive agent for Prudential, & in those
days, life insurance was one of the last sacred things, "tax man, stay
away..."
just got a memo today from the place of employment (healthcare
provider) stating that we are being taxed on life insurance we buy as
employees, if face value is > 50k
now, it's been many years since i worked in the industry, but,
doesn't that sound strange?
I'm paying for the policy - yes its probably at a great premium...
but they are taxing me - on the face amount???
any opinions? can someone lite the way for me here? ever heard of
this? should I ask a lawyer? sounds really bogus to me.....
thanks in advance

I'm only asking for opinions, not for professional help here.....

Jeff