Incidental DB test in 412(i)

[Guest IndyMargaret]

I've been searching through old posts and not finding a clear answer. Forgive my ignorance, but tax law is a bit of a challenge for me.

Re: incidental death benefits:

I understand 100 x monthly benefit.

I understand 50% whole life, 25% term/ UL for a DC plan.

Can the 50% rule be used for 412(i) plan based on the actual contribution? It sounds like that's not valid, but I'm seeing some 412(i)'s with life insurance premium = annuity premium, indicating the originators thought that was an acceptable test.

In IRS Publication 6392 (Rev. 12-2006) III line f, it says "In applying Rev. Rul 74-307 to defined benefit plans the maximum premiums for ordinary life insurance may be no more than 66 (33 if term and/ or universal life) percent of the theoretical contribution." The theoretical contribution is based on the individual level premium method. The next paragraph says, "In addition to incidental death benefits under the above application of Rev. Rul. 74-307, preretirement death benefits under a defined benefit plan will also be considered incidental if: (1) the cost of the death benefit for any individual does not exceed 25 percent of the total cost of the individual's benefit..."

Does that last sentence mean I can take the Table 2001 rates multiplied by # 1000's net amount at risk and compare it to the normal cost? That makes is much easier to pass the incidental death benefit test, so I assume it's not acceptable, but where can I find clarification?

Most of the life insurance policies I'm seeing are intended (not guaranteed) to be 5-pay, so the premiums are much larger than a regular whole life premium, making it particularly challenging to meet the 66% test using premiums.

mwyatt referred to FSA 1999-633 and merlin referred to Jim Holland's letter regarding the 2/3 ILP calculation. May I get copies of those?

Thanks to anyone willing to get back into the 412(i) mess.