IRS liberally construes individual selection rules for group-term life plans

Article Abstract:

The IRS found in Private Letter Ruling 9701027 that an employer's group term life insurance plan was qualified under IRC section 79 despite the fact that employees did have some discretion to adjust their amount of coverage. For a group life plan to be tax-favored, its terms must not allow for individual selection. The employers plan provided non-union employees with the option of reducing their coverage to minimize or eliminate taxation of coverage in excess o $50,000. The IRS acknowledged that this election was a form of individual selection but found that it was permissible.

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IRS confirms that transfer of corporate-owned life insurance to newly formed subsidiaries and partnerships is not a "purchase" causing denial of interest expense deduction

Article Abstract:

The IRS found in PLR 9705015 that transfer of interests in corporate-owned life insurance policies to newly created subsidiaries did not trigger interest deduction disallowance provisions under IRC section 264(a)(4). Section 264(a)(4) limits interest deductions on life insurance policies purchased after June 20, 1986. The policies involved in the ruling were originally purchased in 1985. The IRS found that the transfer was not a modification sufficient to constitute new policies subject to IRC section 264(a)(4).

Public Finance Activities, Corporate Tax Deductions & Exemptions, Taxation, Corporate taxes, Expense deductions

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Health coverage, the employer and multiple employer welfare arrangements

Article Abstract:

Small businesses providing health insurance through a multiple employer welfare arrangement (MEWA) are subject to s. 3(40) of ERISA and IRS s. 419. These regulations were implemented because MEWAs and multiple employer trusts became unregulated insurance companies and were often subject to loss and abuse. States then over-regulated in an attempt to prevent these problems and many businesses were unable to maintain their MEWAs.

Health insurance

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