Second-death life insurance in profit sharing plans

Article Abstract:

Second-death life insurance held by qualified benefit plans with substantial account balances can be used to prevent estate and other taxes from taking most of the bequest from the final beneficiary. The benefit plan must be allowed to purchase directed insurance and income tax must be paid on the insurance's value annually. The insurance would transfer to an irrevocable life insurance trust if the spouse dies before the participant and the estate would be provided with liquidity when most needed. Other advantages are presented.

Pension, health, and welfare funds, Pension Funds & Benefit Plans, Pension Funds, Management, Usage, Qualified benefit plans

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Insured bonus plan - a different approach

Article Abstract:

Employers can deduct the premiums they pay into a restricted, insured bonus plan under IRC Section 83, but the less-restrictive Section 61 does not generally apply. The employer can, without placing restrictions on the cash value of the insurance, tell the executive in question that it will no longer make premium payments if he or she borrows against or withdraws money from the policy, or uses it as security against a debt. The applicability of ERISA to such instances is also considered.

Laws, regulations and rules, Compensation and benefits, Executives, Executive compensation, Retirement income, Bonuses

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Key 1995 tax developments involving life insurance in estate and business planning

Article Abstract:

Tax rulings, appeals, and legislation during 1995 included developments in income tax areas such as company-owned life insurance, 401(k) and nonqualified deferred compensation plans, interest deductions, split dollar arrangements, and Section 1035 exchanges. Estate and gift tax developments involved rulings on trustee removal, split dollar majority shareholders, trust-owned policies held by beneficiaries, and annual exclusion qualification.

Planning, Business planning, Employee benefits

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