Life Insurance within a 401(k) Plan

[Guest AndreaRyan]

Let me explain, I am working on a large filer plan that has a few life insurance policies for a plan participant as part of the plan's assets. This is in addition to the mutual funds the rest of the accounts are invested in. The policies are registered to the plan FBO the participant, as the plan offers Life Insurance as an alternative investment. When reconciling the plan's assets, I would normally include the Cash Value of the policies on my Balance Sheet and ultimately the Form 5500 Schedule H (as well as Schedule A if necessary). I am receiving conflicting information that this is not correct. That the Life Insurance policies do not need to be reported as part of the plan's assets in the financials and therefore the Form 5500.

[Bird]

You are correct; insurance CVs s/b included on the balance sheet. Auditors (and others) get confused b/c certain insurance company products that provide guaranteed benefits are not so included, but regular insurance policies aren't in that category.

[four01kman]

As I recall, the employee for whom the policies have been issued also needs to receive a 1099 each year reflecting the PS 58 term costs.

[MARYMM]

As I recall, the employee for whom the policies have been issued also needs to receive a 1099 each year reflecting the PS 58 term costs.

Correct. At the law firm where I used to work, we offered life insurance as a investment option at one of our Plans.