P.S. 58 costs reported on 1099-R should include "waiver of premiu

[maverick]

Just received the p.s. 58 cost info from an insurance carrier. In addition to the "cost of one year term" they provide "waiver of premium" and "accidential death benefit" amounts. I read somewhere that the 1099-R p.s. 58 amount reported in block 2a is the total of these 3 amounts, but have not been able to find the reference. I think the rationale for including the waiver of prem and AD benefit $$, was these items are "extras," not pure insurance Can anyone help me? Thanks. Maverick

[maverick]

Any takers on this question?

Thank you for your support,

Bartels & James

[Kristina]

As I understand it, PS-58 costs are the cost of the insurance at risk. This is determined on the basis of the face amount of the policy, less the cash surrender value.

Waiver of premium guarantees that the premium can be paid out of the cash value in order to keep the policy in force. The accidental death benefit just increases the payout amount. While both increase the premium paid, I don't see how they would impact the calculation under the PS-58 rate.

If you are using the issuing insurance company's lowest term rate, it might be possible to incorporate the increase in the premium rate to encompass both the waiver and the AD.

[Kirk Maldonado]

My completely uneducated response would be that the employee is taxed on the value of the coverage received, which includes the waiver and the AD benefit.

My position is supported by the fact that (my understanding is that) there are different tables for second to die policies, even though the face amount of the policy is the same in both cases.

Any contrary views out there?