Discussion:Pretax group term life
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Discussion Forum Index --> Tax Questions --> Pretax group term life
| 20 September 2007 | |
| Are the benefits paid under a group term life policy taxed any differently depending on if the employee portion of premiums were paid with pretax or aftertax dollars? | |
| 20 September 2007 | |
| The premiums have to be paid by the employee or included (over $50,000 benefit) in the employee's W-2. I'd suggest double checking whether GTL premiums qualify under Sec 125 plans for Pre-Tax treatment. | |
Actionbsns (talk|edits) said: | 20 September 2007 |
| It seems like Anne's question relates to the treatment of the death benefit from GTL. In which case they should flow to the beneficiary income tax free with no consideration given to the premium. I'm out of date on a lot of insurance issues, but this one I think is pretty hard and fast. Kevin would know for sure. | |
Tonymontana (talk|edits) said: | 12 May 2008 |
| Did anyone ever find a definite answer to this question?
I know for a fact that Group Term Life can be included in a Sect 125 plan. But it does raise the issue on whether the benefit would be taxable. | |
| 12 May 2008 | |
| it is my understanding that by paying premiums within a section 125 plan and therefore paying them with pre-tax dollars, then the benefits become taxable.
so, if Life insurance paid with pre-tax dollars, then life insurance proceeds would be taxable. | |
Tonymontana (talk|edits) said: | 13 May 2008 |
| That makes perfect sense to me.
I just can't find any documentation to support it. | |
| 13 May 2008 | |
| I'm having trouble accepting this analogy "Not 100% but I believe the same thought process is used for employee paid disability policies. These premiums should be paid with after tax dollars so that any benefits received will be non-taxable to that extent.
so, if Life insurance paid with pre-tax dollars, then life insurance proceeds would be taxable" I'm under the impression §101(a) and Reg §1.101-1 generally exclude life insurance from gross income. I don't think life insurance paid on death can be compared with benefits paid to the living under a disability policy???? | |
| 13 May 2008 | |
| Which is why I stated not 100% positive. And my thought process is that why isn't life insurance automatically included underneath the section 125 umbrella? | |
