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Discriminatory group term life insurance


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How do you calculate imputed income in a group term life plan that discriminates in favor of key employees? I do not understand the "tabular" premium described in 1.79-4T, A-6. I'd be interested to see an example of how the imputed income is calculated.

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Guest Harry O

I'll leave the specifics of the tabular calculation for our friendly actuaries. My experience has been, at least for large employers, that the Table I rates are almost always higher (except at perhaps age 75 +) than the tabular rates. Thus, you end up using the Table I rates. This means that the only real penalty to flunking section 79 is that the key employee loses the $50,000 exclusion. Big deal! Depending on your goals, discriminatory group-term life can sometimes make more economic sense than split-dollar.

Your insurance carrier should be able to provide you with the tabular rates.

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