Which plans are eligible for Pre-tax treatment?

[Guest Lydia Oller]

I work for a small employer who has a supplemental life insurance plan. They take employee contributions for this plan after-tax. I would like to switch it to pre-tax but have seen conflicting information about whether or not supplemental life insurance plans qualify. Please clarify.

[Lisa Hand]

First, the insurance must be group term life, no benefit which build value and carries it forward may be included in a Section 125 Plan. Then the premiums are only eligible for pre-tax treatment (IRC, Section 79) for up to a total of $50,000.00in benefit. This number include any amount provided by the employer. For example, the employer provides a base benefit of $30,000.00 in group term life, the employee could purchase an additional $20,000.00 of coverage and their premium could be pre-tax through a Section 125 Plan. However, no amounts above $50,000.00 of coverage are eligible. So depending on how rich your basic benefit is, you may or may not be able to pre-tax the additional premium.

[Guest ddelasierra]

Does anyone know of any good web sites that thourghly explain how imputed income calculations should be done for employee and dependent group term life insurance?

[GBurns]

What imputed income?