Revisiting seasoned contributions for life insurance in dc plans

Hi

Doing some research for an insurance agent about using seasoned contributions in a 401k plan that has 4 sources: Deferrals, match, safe harbor match and profit sharing.

Q1: As all is considered employer monies, I can use 25% of cumulative contributions+forfeitures for universal life policies, correct?

Q2: As all is considered employer monies, I can use 49.99% of cumulative contributions+forfeitures for whole life policies, correct?

Q3: This is where I cannot tell if I can use all sources as seasoned monies. I am ok with the deferral and profit sharing sources but could not find any example including the match and safe harbor match (checked on EOB and no reference to match or safe harbor match - not that I have seen any). Can the match sources be used for either for cumulative and/or seasoned contribution calculations?

Thank you for your comments.

Jak, if you use "seasoned monies" for insurance premiums that exceed the incidental limits, those amounts are treated as a taxable distribution. That's why you get to exceed the incidental limits.

I don't recommend it.

Also, just an FYI even though you didn't ask, rollover monies are not considered in the calculation for the incidental limit since they weren't contributions to that plan.

Hi Bill

Thank you for your response.

I am agreement with you. Cumulative is the way to go but agent is asking??

Be safe.