insurance in a defined benefit plan

[thepensionmaven]

Question has come up regarding insurance in a defined benefit plan.

Product being sold is whole life with renewable term rider.

Based on the insurance formula, the policies for the rank and file do not qualify for the RTR rider, but face amounts for the owners obviously do qualify.

Would this be construed as discriminatory?

[Belgarath]

'Tis possible. Depends upon the auditor, plus I don't know anything about the plan/policies involved, so hard to give anything other than a wishy-washy answer. In a just world, it SHOULDN'T generally make any difference in a DB plan where the employer pays all, the benefit is fixed, and the death benefit is fixed - the employee/beneficiary gets the same benefit no matter what policy type(s) are purchased. But, since the participants presumably have purchase rights to buy the policies out of the plan, then 401(a)(4) comes into play - and I think Revenue Ruling 2004-21 highlights this.