Life Insurnace in Plan; Ptp requests to insure spouse

[buckaroo]

Participant wishes to insure his spouse. I believe that this would be a violation of the "exclusive benefit" rule and possibly some other rules. However, I cannot find a specific citation for this particular scenario. Can anyone help?

[Bird]

My recollection is that a profit sharing plan may buy second to die insurance with the spouse as one of the insureds.

Mmm, looking at a plan document, it specifically permits insurance on the life of the participant and/or the spouse. Then it goes on to say that the limits for premiums on a policy covering the participant are 50% whole life/25% term, and then another section says that seasoned money (accumulated in the plan for 2 years, or where a participant has participated for 5 years) may be used to buy insurance on the life of the participant and/or the spouse.

I think I'd see if your document is that specific and follow the terms. Maybe someone else can provide a cite...

[Belgarath]

A profit sharing plan may permit a participant to purchase incidental life insurance on "him or his family". 1.401-1(b)(1)(ii)

[buckaroo]

Thank you both very much. Insurance is not one of my strong suits. I appreciate the site.

[Guest Sieve]

Remember, though, that it will still depend on what your plan (or trust) language provides.