Schedule A

[Guest C.Wendt]

During a 5500 Webcast, we were advised that Liife Insurance as part of a 401(k) plan should be reported as code 4B on the 5500 Form and then on Schedule A, Part III. Part III deals with premiums or benfits paid. Do you still report the opening and closing value of these policies under Schedule A part II. Have tried the DOL and IRS and no one has answers. Any suggestions?:confused:

[Guest F1fan]

Sounds like someone either mispoke or misunderstood with regard to the Webcast. Code 4B would only apply to a welfare benefit plan, which the 401(k) is not. I do not believe that item 8 of the 5500 has an applicable code for life insurance in a qualified plan. Part III of Schedule A pertains only to welfare benefit plans, so reporting life insurance policies in a 401(k) is not applicable. Part II seems to be the section to report the insurance information.

[Guest F1fan]

I have another comment to add to my original reply. After I responded, I did vaguely recall someone making a similar comment to the one you heard on the Webcast with regard to code 4B. Putting codes in both 8a and 8b of the 5500 seems counter-intuitive to me, and I don't think the directions are clear on it. However, if the 5500 preparation software does not reject it, then I guess it couldn't hurt to try it. However, it still seems to me that Part II of the Schedule is where to report the insurance information, not Part III.

[R. Butler]

Code 4B definitely applies to life insurance in a DC plan. Page 18, Example 3 from the 2000 instructions applies directly to this situation....You do complete part II of Schedule A. The insurance companies that I am familiar with actually give me the information line-by-line, I have to do very little but copy the numbers. You might try contacting the insurance company, they may provide something similar.

[Kristina]

Life insurance in a qualified plan is considered to be a welfare benefit and not a retirement benefit. The 5500 example cited above is correct.

However, Section III of the Sch A is the appropriate section to complete for the life insurance. Item 7 is marked to indicate life insurance and Item 9 is to contain the premium amount.

I realize this flys in the face of the way we have completed the Sch A's in the past, but after 3 calls to the IRS and the DOL last year, I am a believer. The responses I received all three times were the same and called for Part III of the Sch A. Because it was the first year for the DOL to take over the 5500's, their perview under ERISA was the basis for the change.

The webcast was correct!!!

[R. Butler]

I looked into this a little further and I now agree with Kristina. Part II is for investment and annutiy contracts; Part III is for ancillary life insurance.

I learn so much more from this board than I contribute.

[Guest F1fan]

Count me among the converted on this topic.

[Guest sdolce]

I heard the same thing at the same webcast and I agree with all of the previous posts.But there is at least one insurance company that still does it the old way. We just got a copy of Sch. A information and instructions for one of our DB clients from The Equitable. Their instructions for Part III read : "Leave blank. This section does not apply to pension or profit-sharing plans." Also, if we fill in Sch.A as per the webcast instructions our SAR software (provided by Relius/Hyperprep) produces an SAR that ,makes no mention of insurance in the plan.If we code Sch.A the old way the SAR comes out fine.Any comments?