Cost of Incidental Life Insurace

[MARYMM]

I'm new to 403(b) Plans - my prior experience has been with 401(k) and HR10 So I am reading IRS Pub. 571 to learn about them. In Chapter 3, the cost of incidental life insurance is discussed. If an annuity contract includes incidental life ins., the employer must include the cost of that coverage on the employee's W2.

Questions:

1. Does this apply to non-ERISA 403(b) Plans ?

2. Is this also known as PS-58 cost ? (we used to offer whole life as an investment option in the HR 10 plan and had to issue 1099 R's each year for the PS 58 cost of the term life portion of the policies)

Thanks in advance

[Kirk Maldonado]

MARYMM:

1. I've not done any 403(b) work for at least 15 years, but my recollection was that life insurance protection provided under a 403(b) plan is taxabble in the same manner as if it were provided in a tax-qualified retirement plan. If anybody knows differently, please correct me.

2. This scheme of taxation for coverage provided under tax-qualified retirement plans was based upon an IRS pronouncement referred to as "P.S. 58." I believe that this guidance was issued in the late 1950s.