|
Reporting the Cost of Your Basic Life Insurance Coverage
The Internal Revenue Service (IRS) requires you to include in your gross income
each year the cost of your life insurance coverage in excess of $50,000 that is
paid by your employer. To compute the amount required by the IRS, start with your
total coverage. Then subtract $50,000 and, using the IRS rate chart below, calculate the cost
of the difference. Subtract any aftertax contributions you make from this cost. Do not
subtract your pretax contribution. To comply with this law, the University must report
the taxable portion under "other compensation" on the W-2 form. You
will see a pro rata portion of your annual imputed income on each of your paychecks during
the year.
To Avoid Taxes
To reduce or avoid liability on your tax form, you may want to pay your life insurance
premiums on an aftertax basis rather than a pretax basis. This could be advantageous
if you select a large amount of life insurance coverage.
See Premium Conversion for more information.
|
IRS Rate Chart
|
|
Age1 |
Cost per
$1,000 of
Coverage
|
|
Under 25
|
$ .05
|
|
25 - 29
|
.06
|
|
30 - 34
|
.08
|
|
35 - 39
|
.09
|
|
40 - 44
|
.10
|
|
45 - 49
|
.15
|
|
50 - 54
|
.23
|
|
55 - 59
|
.43
|
|
60 - 64
|
.66
|
|
65 - 69
|
1.27
|
|
70 & up
|
2.06
|
1 Age on the last day of your taxable year
|
