Imputed Income for Employer Sponsored Life Insurance

[Guest TierneyJF]

Based upon the information & examples below, are we calculating the taxable income to impute employees correctly?

The Child Life example resulted in a credit. Can I apply the credit to the other taxable amounts as an aggregate amount to be imputed?

I am sorry for the length of the question. I wanted to display each component of the process we use:

My employer sponsors the following Life plans:

Basic Group Term Life Insurance (1.5 X Salary) employer paid

Supplemental Life (Increments 1x to 6x Sal) employee paid

Spouse Life (25K, 50K or 100K) employee paid

Child Life (5K, 10K or 25K) employee paid

Listed below are hypothetical elections to set up an example:

Basic: 1.5 X 200K Salary minus(-) 50kexemption = (250K is taxable to be imputed).

Supplemental: 1 X200K = (200K taxable to be imputed)

Spouse: 50K = (50K taxable to be imputed)

Child: 10K = (10K taxable to be imputed)

Listed below are the employee premiums paid after taxes:

Basic: $0 (100% employer paid)

Supplemental: $25 per Month (100% employee paid)

Spouse: 50K = $10 per Month (100% employee paid)

Child: 10K = $1 per Month (100% employee paid)

Imputed Income Calculations:

Basic: $250K / 1K X (Age 50 Table 1 premium) .23 = $57.50

Supplemental: ($200K / 1K X (Age 50 Table 1 premium) .23) - $25 (ee after tax premiums paid) = $21.00

Spouse: ($50K / 1K X (Age 50 Table 1 premium) .23) - $5 (ee after tax premiums paid) = $6.50

Child: 10K = ($10K / 1K X (Age <25 Table 1 premium) .05) - $1 (ee after tax premiums paid) = (-$.50)

Total Taxable Amount to be imputed:

Basic: $57.50

Supplemental: $21.00

Spouse: $6.50

Child: 10K = (-$.50)

Total Taxable Amount to be Imputed: $84.50 per Month/$1,014 for the Year

Thank You,

Jim Tierney

[Harwood]

Not sure if this is a payroll question or retirement plan question.

For Payroll, check Publication 15B http://www.irs.ustreas.gov/pub/irs-pdf/p15b.pdf

[among other things, it states that you don't use the spouse's age]

If a Retirement Plan question, check the terms of the plan Document for compensation definitions.

Of course, the Payroll rules lead to what is in Box 1 of the W-2, though GTL in excess of $50,000 is not subject to withholding under IRC 3401(a)