Section 79 Plans

The rules are that you can deduct the premium cost for 50 000 of group life insurance for each employee.

Section 79 plans. Section 79 plans listed transactions reportable transactions 419e 412i and captive insurance plans are all targets of irs auditors. When you break down the math and the sales pitch however it just doesn t make sense. What is a section 79 plan.

The tax deduction for it is in section 162 of the code. Cover at least 70 of employees no more than 15 of the participants are key employees benefits based on reasonable classifications. In applying section 79 b of the internal revenue code of 1986 as added by subsection a 1 of this section to a taxable year beginning before may 1 1964 if paragraph 2 b of such section applies with respect to an employee for the period beginning may 1 1964 and ending with the close of his first taxable year ending after april 30 1964 such paragraph 2 b shall be treated as applying with respect to such employee for the period beginning january 1 1964 and ending april 30.

So what is a section 79 plan. October 25 2010 by. It is a tax plan where small business owners are told that they re allowed to take a tax deduction through their businesses in order to purchase life insurance.

These plans are employee benefit plans established under section 79 of the internal revenue code. Section 79 plans are commonly known for the 50 000 free term life insurance they can provide for employees. The dangers of being listed a warning for 419 412i sec 79 and captive insurance.

Do you know the ins and outs of these plans enough to protect yourself or clients. In order for a section 79 plan to maintain its non discriminatory form other conditions must be met. There are no tax consequences if the total amount of such policies does not exceed 50 000.

What is a section 79 plan. That sounds pretty good doesn t it. Irc section 79 provides an exclusion for the first 50 000 of group term life insurance coverage provided under a policy carried directly or indirectly by an employer.