Many employers provide life insurance as an employee benefit. The Internal Revenue Code allows employees to exclude the first $50,000 of group-term life insurance coverage provided by an employer. There are no tax consequences to an employee if the total amount of the employer-provided life insurance plicy does not exceed $50,000. If the policy is $50,000 or more, the imputed cost of coverage in excess of $50,000 must be included in the employee’s income. Such amounts are subject to Social Security and Medicare taxes.
Benefit Allocation Systems, Inc. has developed a report that calculates the amount of income that needs to be included on an employee’s Form W-2 for life insurance coverage in excess of $50,000. The new report shows the amount of excess coverage by month, the IRS calculation rate per $1,000 of coverage, and the total amount of imputed income for the employee for the calendar year. The determination of the premium charge is based on the IRS Premium Table Rates published by the Internal Revenue Service.
This new imputed income reporting tool is useful for all employers who offer group term life insurance. BAS has made calculating imputed income easy and seamless.
For more information about the tool, contact your account manager or solutions@BASusa.com.