Section 79 plan
Section 79 of the Internal Revenue Code [1] details the tax consequences and requirements for corporations wishing to install a group-term life insurance plan. Permanent life insurance may also be offered as an added benefit in a Section 79 plan. Section 79 plans are non-qualified as defined by the Internal Revenue Code, but still offer a tax deduction for sponsoring employers.[2]
Employees participating in a Section 79 plan offered by a sponsoring corporation may receive up to $50,000 in group term life insurance at no cost, if the plan is non-discriminatory. Any amount over this limit is deemed a 'permanent benefit'. The employee should realize a portion of the permanent benefit as W-2 taxable income, and pay any applicable taxes accordingly. Contributions to a Section 79 plan are tax-deductible, though for owner(s), and 2% or more shareholders, contributions are only deductible if paid by, and from, a C Corporation.
No comments:
Post a Comment