Employer-Owned Life Insurance: What To Watch For

Law360, New York (April 5, 2010, 1:28 PM EDT) -- Historically, proceeds received by an employer from a company-owned life insurance policy upon the death of an employee were not taxable under Internal Revenue Code (Code) Section 101(a). However, Code Section 101(j) added by the Pension Protection Act of 2006 (Act) constitutes a major change from the prior law.

Under Code Section 101(j), insurance proceeds (in excess of premiums paid) received from an employer-owned life insurance contract (EOLIC), are taxable unless (1) the EOLIC qualifies under a prescribed safe harbor, and (2) certain notice, consent and...
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