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Showing results for tags 'Form K-1 Issuance'.
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Let's say employer X creates trust T to fund medical and disability benefits. If the benefits are partly insured, some of the assets of T may be used to pay for premiums under the medical and disability plans. The IRS instructions to Form 1041 say that a K-1 has to be issued to each beneficiary in the year in which a trust makes a potentially deductible distribution from its assets. In this scenario, assuming all of X's active employees (let's say, a nice round number, like 10,000) were covered by its medical and disability plans, would a Schedule K-1 have to be issued to each employee participating in X's medical and disability plans based on the payment of premiums by T, the payment of benefits by T, or at some other time? This reporting requirement appears to be sufficiently onerous as to make a non-exempt trust a definite non-starter for any employer who is considering one. If issued in connection with the payment of premiums, would a K-1 be issued to each employee for which T paid premiums showing a $0 taxable amount, based on excludable health and accident coverage? Thoughts, anyone?
