Excerpt: IRS recently ruled that the payment of premiums on long-term care policies held by a 401(k) plan for the benefit of electing participants would run afoul of the qualification requirements. IRS reasoned that such payments would be considered taxable distributions and, therefore, would violate the restriction imposed by IRC § 401(k) which permits distribution only on account of severance from employment, death, disability, plan termination, age 59-1/2, hardship, and a qualified reservist distribution. IRS Private Letter Ruling 200806013 (November 15, 2007).

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