insurance in the plan... but only one person left

[AlbanyConsultant]

This is an old 401k plan that offers insurance to participants.  Over the years, a handful of participants have opted into it, but they've all come and gone... except for the owner (who is age 70+).  Do I have a problem now that the only participant in the plan with insurance is the owner?  If not, does that answer change if we stop offering it to new participants?  Seems like a BRF issue looming...

Thanks!

[Peter Gulia]

Is this a life insurance contract? Or an annuity contract? Or something else?

Does the contract require continuing premiums? Does the contract permit further premiums?

If there is a choice, does the participant want to pay further premiums?

[AlbanyConsultant]

Regular life insurance (don't recall if it's whole or term, but I don't think that matters).  Premiums are paid annually; we carve them out of the ER contribution deposit.  The participant (i.e., the owner) doesn't want to pay them personally at all.

[Peter Gulia]

Consider whether the opportunity to buy life insurance is a “right to a particular form of investment”, and so an “other right or feature”. 26 C.F.R. § 1.401(a)(4)-4(e)(3)(iii)(C) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(4)-4#p-1.401(a)(4)-4(e)(3)(iii)(C).

Consider whether a life insurance death benefit is an “ancillary benefit”. 26 C.F.R. § 1.401(a)(4)-4(e)(2) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(4)-4#p-1.401(a)(4)-4(e)(2).

One might be reluctant to preserve the opportunity to pay life insurance premiums only for participants who began the contract before the plan-amendment date if the only participant who fits that description is a highly-compensated participant.

Isn’t it simpler to continue the life insurance opportunity for all participants, or all non-severed participants?

This is not advice to anyone.