P.S. 58 Rates (also see “Table 2001”) Reportable Economic Benefit For Split-Dollar – Single Person. P.S. 58 rates are the Federal government’s one-year term rates used to compute the “cost” of pure life insurance protection.
What are split-dollar life insurance policies?
Split-dollar life insurance is an agreement between two parties to share the costs and benefits of a permanent life insurance policy. Often, the agreements are between an employee and an employer, with the split-dollar plan showing up in an executive compensation package.
How is split-dollar life insurance taxed?
If the employer (or other party responsible for paying the premiums) owns the policy, then the arrangement will be taxed under the “economic benefit analysis.” If the employee owns the policy, the arrangement will be taxed as a “split-dollar loan.” The economic benefit analysis closely resembles the previous approach …
Is life insurance qualified or nonqualified?
Qualified plans include 401(k) plans, 403(b) plans, profit-sharing plans, and Keogh (HR-10) plans. Nonqualified plans include deferred-compensation plans, executive bonus plans, and split-dollar life insurance plans.
What are qualified retirement plans?
A qualified retirement plan is a retirement plan established by an employer that is designed to provide retirement income to designated employees and their beneficiaries, which meets certain IRS Code requirements in terms of both form and operation.
Are PS 58 costs taxable?
The P.S. 58 costs are basis in the participant’s account and are not taxed again when distributed to the participant or beneficiary unless the participant is a Self-Employed Individual.
What is the cost of the PS-58 tax?
The PS-58 cost is the tax on the employees share of the life insurance premiums paid by the employer.
What do you need to know about the PS-58?
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What kind of life insurance is affected by PS 58?
Therefore, the life insurance policies affected by these costs are group plans, split dollar plans, profit sharing plans that include life insurance, and other work related life insurance policies. Please leave this field empty. PS 58 Costs are taxes in group policy that the employer pays.
How does the profit sharing plan PS-58 work?
The PS-58 cost is the tax on the employees share of the life insurance premiums paid by the employer. The profit sharing plan must include a life insurance component & therefore it is generating the PS-58 costs. Here’s an example of how it works; if you obtain a copy of the actual plan that the employee is participating in,…
