term life insurance in DC plan

[AKconsult]

This is a one-person DC plan (doctor). He is paying life insurance premium from plan for term life policy. Is this acceptable? Don't I need to report

the premium paid on a 1099-R as taxable?

[A Shot in the Dark]

There is no reason why the insurance can not be a plan asset as long as:

The Plan Document allows for it

The insurance policy is titled correctly

The rules regarding contributions/premiums are being followed

Only the cost of insurance (PS 58 Costs) need to be reported as taxable income for the participant. Thay may or not be equal to the term premium.

Reporting the PS 58 costs as taxable income is done so that the proceeds of the death benefit receive the best tax advantage.

[Belgarath]

"Only the cost of insurance (PS 58 Costs) need to be reported as taxable income for the participant. Thay may or not be equal to the term premium."

I'd just interject a note of caution here. I'm not certain that the IRS necessarily agrees. I heard second-hand from a tax attorney many years ago who had just returned from the IRS National Office, and had been in conversation on just this issue, that he received "conflicting" views. One view is that entire premium is considered TTC, and you can't use a lower rate. I bring this up FWIW.

P.S. - it is really a matter of semantics, but for the S/E, it isn't actually "reported" as income on a 1099. Instead, it simply isn't deducted on the tax return. So plan contribution 20,000, TTC of 1,000 - S/E only deducts 19,000.