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profit sharing plan with insurance


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Profit sharing pla with insurance is terminating.

The principals are the only participants with life insurance coverage.

The policies are in the process of being surrendered and the cash value will be rolled over to one of the plan annuities for distribution.

Would the cash value be allocated among all participants or just to the principals who were covered?

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How were the premiums funded; from the entire plan or from the principals who were the insureds account balances? Typically, each insureds own account balance is used to fund the premiums for their individual policies. Therefore, any cash surrender to go directly back to them; as it presents the equivalent of an investment of dollars in their account.

Good Luck!

CPC, QPA, QKA, TGPC, ERPA

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Premiums not paid from side fund, but from company contriubtions.

Owner and bene are the plan.

So, the company contributions that were directed toward each owner where used to pay the insurance premium for the respective owner?

This is the equivalent of an investment of a portion of that owner's account balance in an insurance policy. Even in a balance forward system, the top-down allocation of earnings would apply only to the owner's balance that doesn't include the insurance policy (as the insurance policy would be a separate investment of the account balance for that particular owner). I'm trying to keep my semantics in check while trying to explain the concept.

Good Luck!

CPC, QPA, QKA, TGPC, ERPA

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