Employee Plans Compliance Unit (EPCU) – Schedule A (Insurance Information) |
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Background
When insurance is purchased in a qualified plan, certain requirements must be met including proper reporting of premiums, proper reporting of death benefits, and the insurance purchased must be incidental to the primary purpose of providing retirement benefits (Income Tax Regulation sections 1.401-1(b)(1)(i) and (ii)).
When requirements for purchasing insurance are not met, it is possible for death benefits to be excessive, for plans to violate the incidental benefit rule, for the actual amount of insurance purchased to be underreported resulting in abusive tax avoidance or for prohibited discrimination in favor of highly compensated employees to occur.
The Project Process
Compliance contact letters will be sent to a selection of plan sponsors of defined contribution plans that filed a Form 5500, Schedule A asking for verification that the plan was in compliance with the requirements for purchasing life insurance. The responses from each plan sponsor will be reviewed to verify whether the insurance was properly purchased, distributed, and reported.
If You Receive a Letter
Please provide the information requested by the letter. You may also furnish any other documents or clarifying materials that you believe will be helpful for us to review. You should make every effort to answer the letter as accurately as possible and may even complete the compliance check by writing directly on the Request for Information (pages 3 and 4 of the letter) and sending those pages back to us along with any supplemental materials. Failure to provide this information could result in further action or examination of your plan.
FAQs
Common questions and answers about the Form 5500, Schedule A Project.
If You Have Questions
Please feel free to e-mail us and we will be glad to answer any questions you have about the project and how it relates to your situation. Please include “Schedule A Project” in the Subject line.
Other Resources:
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Page Last Reviewed or Updated: December 08, 2008