Is term insurance premiums considered plan expenses

[Guest dgee0721]

I have a pension plan where term insurance is purchased as an incidental benefit to the employees. Is the insurance premium considered a part of expenses in determining the asset rate of return for Schedule SB purposes?

[Rball4]

Premium payments are counted as contributions on the SB.

[Guest dgee0721]

If assets are used to pay the term insurance premiums, how can they be contributions on the SB?

[My 2 cents]

Some aspects of the determination of the rate of return on the SB (presumably as used to update the credit balances) have not been clarified, nor has there been any clarification as to what counts as expenses for Target Normal Cost purposes. It is my understanding that some practitioners, for example, exclude investment expenses from the estimated expenses required to be added to the Target Normal Cost. Presumably, those practitioners would reduce the investment income accordingly.

Not sure how insurance premiums (term or otherwise) are handled, but I do agree that if they are paid from the plan assets they would certainly not be considered contributions to the plan, except to the extent that next year's Target Normal Cost is increased in anticipation of the removal of assets to pay premiums next year. In that case, cash contributions next year to cover next year's Target Normal Cost (as opposed to the insurance premiums themselves) would be recognized as contributions.