Incidental benefit limit for life insurance.

[Guest Thornton]

A profit sharing plan permits the purchase of life insurance. An exception to the incidental benefit limit of 25% and 50% of aggregate contributions for term and whole life insurance, respectively, applies to "seasoned contributions." These are contributions that have been accumulated in the trust for two years. I have three questions:

1) Would 401(k) deferrals, which are considered employer contributions, be within the exception even though they cannot be distributed prior to age 59 1/2?

2) Does the exception apply to profit sharing contributions and/or 401(k) deferral contributions even if the plan document does not permit in service distributions?

3) If an employee has been a participant for 5 years or more, can he or she invest all employer contributions into life insurance, even those contributed within two years??

Thanks.