Imputed Income

jriley

Hi,

Can you tell me if supplemental life insurance should be included in imputed income?

The internal revenue code 79 indicates that all supplemental life insurance should be included, however, our payroll vendor, ADP, says it shouldn't be.

Thanks in advance!!!

Betty I_O

Employee pay-all supplemental insurance offered by an employer may have tax consequences. If the cost of an employee's insurance is less than the cost in the IRS Uniform Premiums table, the difference will be taxable income for the employee.

NaeNae55

I am assuming by using the term 'supplemental' you mean the employee pays for the premiums and not the employer. (Employer pays for basic life and supplemental is voluntary?)

I am also assuming this plan is not covered under Section 125. If my assumptions are correct, there are no tax consequences that the employer has to deal with. If the plan pays out any benefits later, they will be taxable, but unless your plan is self-funded (extremely unlikely) that will be between the insurer and the beneficiary.

If my assumptions are wrong, please clarify and I will try to respond again.

Good luck!