Ins. Cash Value reported on the 5500

[Guest nls]

Does anyone know if the Cash Value of individual life insurance policies in a 401(k) Plan needs to be reported as an asset on the 5500? If it does, how is it reported - what lines on the Schedule H?

[Guest mariecummiskey]

if they are individual life policies in force we do not show as assets on the 5500.

[Guest KristinaGK]

That is not the position of the DOL/EFAST. They want the insurance cash value included as it is an asset of the plan. I believe this would be an "other" asset on line 15 of the Sch H.

[Kirk Maldonado]

mariecummiskey:

What is your rationale for excluding them?

[Archimage]

I agree. These must be included as assets reported on the schedule H. I would report it either a pooled separate account on line 10 or line 14 if it was not allocated to any participant(s).

[Guest mariecummiskey]

our rationale has been the paragraph on top of sched h, right under "Part I: asset and liab statement". i would cut and paste if i could- it says midway through"...Do not enter the value of that portion of an insurance contract which guarantees, during this plan year, to pay a specific dollar benefit at a future date"

[Guest nls]

I would think that it should be reported under 15 on the Schedule H - However, Aspen Publishers' 5500 Preparer's Manual specifically says Not to include Cash Value of allocated ins. contracts on this line (I do not know why)- but I do not see where else it should go.

Line 10 is for PSAs and line 14 is for unallocated ins. contracts -- Cash Value of allocated life ins contracts is neither of these.

[four01kman]

"Do not enter the value of that portion of an insurance contract which guarantees, during this plan year, to pay a specific dollar benefit at a future date"

The cash value of an individual insurance policy guarantees the payment of that sum immediately. It is not a specific dollar benefit at a future date. Include the value.

[Guest nls]

I called the DOL regarding this and the reponse that I received was that the Cash Value of allocated contracts should not be reported as an asset of the plan.

Therefore, the cash value of the individual life insurance polices in the 401(k) plan should not be reported on the 5500 Schedule H.

[Belgarath]

Purely out of curiosity - does anyone know why there was ever a "carve out" of "individually allocated" insurance contracts in the first place? To my simple mind, common sense would dictate that an asset is an asset, and as long as it is owned by the Plan, it's an asset. Not that it matters - you just prepare the forms according to the instructions - (and obviously there are different interpretations of what those instructions mean) - I'm just wondering if there's any logical reason for it.

[Guest mariecummiskey]

i checked with others who have worked with what we've called "split funded" plans for years. all agreed not to include the insurance cash value, and that they have been doing so for years.

(not that i follow the logic that if you did it last year it is correct!)

i have told auditors of a few large plans that ins. cash value was not included, and they have gone along with it.

[R. Butler]

Purely out of curiosity - does anyone know why there was ever a "carve out" of "individually allocated" insurance contracts in the first place?

I tend to agree with those that report it, although my boss disagrees so we don't report it.

The best reasoning I've seen for the possible exception is in the following post:

http://www.benefitslink.com/boards/index.php?showtopic=15630