WCL Employer Owned Life Policies
04-21-2008
Sample Notice and Consent Form and New IRS Reporting Form 8925 for Employer Owned Life Insurance cases.
As of August 18th, 2006, under new IRC section 101(j), death benefits to an employer under employer-owned life insurance contracts will generally be income taxable to the employer to the extent the proceeds exceed the premium cost.
However, the income-tax free status of the policy proceeds can be maintained if the employer meets certain requirements. One such requirement is that the employee must be given written notice and must provide written consent prior to issuance of the policy.
Additionally, as a complement to the Notice and Consent requirements of IRC section 101(j),Congress enacted section 6039I, which establishes reporting requirements with respect to employer-owned life insurance contracts (including policies on key persons). The new IRS form is Form 8925. This form can be found on the IRS website at http://www.irs.gov/pub/irs-pdf/f8925.pdf.
In order to provide support to the field force a sample ‘notice and consent’ form has been created for use by your client’s attorney in preparing a document for the Employee to acknowledge and sign (West Coast Life does not require a copy of notice with applications). This form is to be retained by the Employer. The sample form may be found on our web site www.buaweb.com.
If you have any questions, please contact your Brokerage Sales Consultant @ 800-792-6795.
