James Jenkins, a key employee, has group-term life insurance coverage of $100,000 paid for by his employer. The plan discriminates in favor of key employees. James must include the actual cost of the $100,000 policy in his income.

Question

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According to IRS regulations, key employees must include the cost of employer-provided group-term life insurance coverage exceeding $50,000 in their income. This is considered a discriminatory benefit and is subject to taxation. In this case, James Jenkins would need to include the actual cost of the $100,000 policy in his income for tax purposes.

James Jenkins, a Key Employee, Has Group-Term Life Insurance Coverage