Life insurance an asset?

[R. Butler]

Schedule H, Part I states that you do not enter the value of the portion of an insurance contratc that guarantees during this plan year to pay a specific dollar benefit at a future date. We have always taken the postion that this means we should not include the cash value of life insurance policies held by the plan. I have a one person plan that has always had less than $100,000 in assets and has never had to file. If I include the cash value of insurance assets exceed $100,000 at 12/31/99; if I exclude insurance assets are less than $100,000. Do I include the insurance as an asset file or not?

[thepensionmaven]

There is no Schedule A needed on a one life (owner) plan.

As you know, there are no specific instructions for this on the 5500EZ, but if this were a regular 5500, Schedule I tells you NOT to include the cash value of any life insurance contracts.

[rcline46]

Assets include insurance values UNLESS the insurance is an irrevocable commitment to fund benefits, ie a deferred annuity. Normal life insurance would be added to the assets and reported. If this is a defined benefit plan, you would find the inclusion / exclusion of insurance in the Schedule B asset instructions. See also instructions for Schedule H.

[Guest Jim Hunzelman]

I agree with rcline46. With very few exceptions, I have always considered life insurance to be a plan asset and have reported it in the plan financial information. I know that it is easy to confuse a "fully insured pension plan", such as a 412(i) plan, with one that has some or even all of its assets invested in life insurance or annuity products. If the plan is a "fully insured pension plan" as defined in Regs. 2520.104-44(B)(2) it is exempt from filing Schedule H or Schedule I. I have a number of plans that are invested entirely in insurance or annuity products, but they do not meet the requirements of the reg cited above and, thus, are not "fully insured pension plans". These plans must file Schedule H or I and report the value of the insurance or annuity contracts as part of plan assets.