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GBurns: That was sort of where I was headed in terms reflecting the proceeds on the 2014 5500 and then showing the same being paid out on the 2015 5500... I believe premiums were paid up in 2006.

If you want to get academic about it the whole collateral idea is silly. Even in a balance forward plan the loan is self collateralizing. If you default on the loan your account balance goes down by the amount of the loan defaulted. The plan and no other participant can suffer a loss. In a daily plan it is all the more obvious no one is hurt. The only possible exception to this would be those very rare balance forward plans that had the loans as part of a general bond/fixed income fund and thus the loan was a general asset of anyone in the plan. But those were so rare back in the day of balance forward plans and now my guess next to none exist. To use an extreme example that violates the rules. If I have a $10,000 account balance and I got a $10,000 loan some how then defaulted how would anyone suffer for the lack of collateral? My account balance would go to zero the same as if I had just gotten an in-service distribution of my whole balance.

It is not a good idea. It adds confusion to complexity.

May be a bit simplistic, but why wouldn't the proceeds be considered earnings in 2014 when the participant died and the insurance was paid out rather than the years the premiums were paid? Was the value of the policy the same over the whole time period or were there any stipulations that it wouldn't be paid out until after a certain date? You might check this posting: 5500 : reporting life insurance premiums under Exec Comp 5500 on this board. It talks about where to put the insurance premiums on the 5500 each year and differing views. I can't seem to put a direct link though....

This made me giggle. Where is this administration firm? North Korea or something?

I probability should not mention this but just to be clear interestedparty you are worried about some check for 10K? Those people handling your check get your annual payroll data. They know your SSN, how much you make a year, they most likely know your address. I could go on. I know the pay of every employee from CEO on down for every company I help run their retirement plans. (I work on exclusively on ESOPs now but got my start in 401(k) work.) I know their SSN also. If I am going to commit a crime with this information it isn't going to be from some guy who thinks $10k is serious money. All this information is needed to help your company run the 401(k) plan. Done wrong and someone is going to pay large fines to the IRS. I would add if the loan is set up wrong that non-taxable event turns into a fully taxable distribution. If you are under 59.5 you would get to pay the 10% penalty for taking a distribution before you are 59.5. If the payment back to the 401(k) loan is not done right it becomes a taxable distribution. More can go wrong then you think. The end results can have a bigger impact then you think. Lastly, like others I find it funny about the 10k. So you really think the people who work on your company's 401(k) plan make less then 10k/year? That is less then $5/hour.