Section 79 Life Insurance

1954 subparagraph a shall not apply in the case of any individual retiring under such plan after december 31 1986.

Section 79 life insurance. In the case of any plan which after december 31 1986 is a discriminatory group term life insurance plan as defined in section 79 d of the internal revenue code of 1986 formerly i r c. Permanent life insurance may also be offered as an added benefit in a section 79 plan. 1954 subparagraph a shall not apply in the case of any individual retiring under such plan after december 31 1986.

General rule the nondiscrimination rules that apply to group term life insurance plans generally require that employers not make available a greater coverage amount whether a flat dollar amount or based on a percentage of compensation to key employees than is made available to non key employees. Irc section 79 provides an exclusion for the first 50 000 of group term life insurance coverage provided under a policy carried directly or indirectly by an employer. Section 79 details the tax consequences and requirements for employers wishing to install a group term life insurance plan.

The value of employer provided coverage over 50 000 is included in the gross income of employees and is subject to tax. B special rule in the case of discriminatory group term life insurance plan in the case of any plan which after december 31 1986 is a discriminatory group term life insurance plan as defined in section 79 d of the internal revenue code of 1986 formerly i r c. Section 79 of the internal revenue code provides an income tax exclusion for the value of the first 50 000 of employer provided group term life insurance coverage.

There are no tax consequences if the total amount of such policies does not exceed 50 000. The taxable amount of employer provided group term life insurance is commonly referred to as imputed income because employees are taxed as if they had received the taxable value of the coverage in cash. The tax deduction for it is in section 162 of the code.

If you ask me what a section 79 plan is i ll tell you that it s one of the most over sold and over abused life insurance sales gimmicks in the insurance industry. The rules are that you can deduct the premium cost for 50 000 of group life insurance for each employee. A section 79 life insurance plan typically is used to provide group life insurance benefits.

Section 79 is the section of irs code that encourages allows employers to offer life insurance along with health insurance to their employees. Only life insurance in excess of 50 000 is reportable. The name refers to the u s.