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Showing results for tags 'cash surrender value'.
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Hi all, CPA here working on a Form 5500 audit (new account for us). The Plan is a defined contribution profit sharing plan that owns four life insurance policies with a total cash surrender value that comprises ~40% of plan assets. Are these contracts required to be reported on Form 5500 at cash value? I am being told by the Plan's third party administrator that they have never been reported as Plan assets because Form 5500 Schedule H Part I it states: "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.". I am hoping to get some insight and/or pointed to some guidance as I am not too familiar with qualified plans that offer life insurance. I have had a few in the past where the value has been reported but the value was not significant to the plan, so it was never a sticking point with respect to our report. Any help would be greatly appreciated! -
HI I am working on closing a 401(K) plan as two companies merge and move to a single plan. In the plan that is closing there are two life insurance policies owned by the plan on one of the employees. The employee, who is retired, wants to take the cash surrender value of the insurance and receive it and then invest with his financial advisor. Who pays the taxes on the insurance policies as they are distributed - the insured (Retired Employee) or the plan who owns the policy but is liquidating it and sending to the employee.