Let's suppose you have a sole prop who makes a $30,000 contribution to a PS plan. He has life insurance in the plan, TTC of $1,000.00. In this situation, he just deducts $29,000 on his 1040 when he files it. So far, so good.

Now suppose that in a given year, he makes no contribution to the plan. There's still TTC, since premium paid from the fund. How does he report this on his 1040, since there's no otherwise normally deductible contribution from which to subtract it? As miscellaneous income on line (well, I don't have the form handy, but whatever line you use to report miscellaneous income?) I guess that's what I'd do in lieu of anything more concrete...

Other?

I suspect you must issue a 1099 for the insurance cost, regardless of the deduction available elsewhere.

I also don't like the idea of reducing the deduction and not issuing the 1099. I think you issue the cost of insurance on 1099 and show the total pension deduction on front of 1040.

Any accountant who wants to correct me if I'm wrong?