Permanent life insurance benefit in connection with s. 403(b) contract considered incidental

Article Abstract:

A life insurance benefit can be provided as a part of a s. 403(b) tax-deferred annuity contract as long as it qualifies as incidental to the contract's main goal of providing retirement benefits. The insurance benefit is considered incidental if it follows s. 401(a) requirements for incidental death benefits, namely, that the premiums paid for each participant amount to less than 50% of the contributions made for the plan participant at any time.

Life insurance

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The death knell for secular trusts: recent private letter rulings

Article Abstract:

The IRS has issued two private letter rulings (PLRs) which hold to concurrent taxation of secular trusts. PLR 9206009 concerned a trust for nonemployee directors while PLR 9207010 covered executive employees. The IRS holds that section 402(b)(2)(A) applies and so both employer and employee contributions to the plan are taxable. Secular trusts for highly compensated executives are now endangered unless future litigation resolves the issue.

Deferred compensation

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IRS issues private letter rulings on secular trusts

Article Abstract:

The IRS issued four private letter rulings which clarify the taxation of secular trusts. The rulings apply s. 402(b)(2), s. 72(q) and s. 404(a)(5) to detail employers' tax liability and plan compliance to secular trust rules. Secular trusts are used to hold compensation payments for employees because they provide an immediate tax deduction for the employer.

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