- 29 -
the face amount of $67,069. At the time of conversion, the C-
group term policy’s conversion credit balance was $43,304, and
$41,138.80 of that amount ($43,304 x 95%) was transferred to the
C-group conversion UL policy for potential earning. Mr. Mall
will earn these credits in 120 equal monthly installments,
beginning October 1996. The conversion credits of $41,138.80
equaled the amount referenced in Commonwealth’s table of
conversion credit values for the following variables: (1)
Business issued before February 1, 1993, (2) male, (3) issue age
47, (4) duration of 4 years 7 months, and (5) $500,000 death
benefit.
The Neonatology Plan paid no benefits during the relevant
years, and the 1992 and 1993 Forms W-2, Wage and Tax Statements,
that Neonatology issued to Dr. Mall did not report any life
insurance benefits provided to her under the plan. On their
joint 1992 and 1993 Federal individual income tax returns, the
Malls reported $1,626 and $3,654, respectively, as P.S. 58
income.17
17 The term “P.S. 58" refers to the rates deemed by the
Commissioner to be acceptable in determining the cost of life
insurance protection includable in gross income for a participant
covered by a life insurance contract held in a qualified pension
plan. See Rev. Rul. 55-747, 1955-2 C.B. 228; see also sec.
1.72-16, Income Tax Regs.; cf. sec. 1.79-3, Income Tax Regs.
(rules generally used to determine the cost of group term life
insurance provided to employee by employer). See generally sec.
79(a)(1) (employee’s gross income generally does not include the
cost of the first $50,000 of group term life insurance on his or
(continued...)
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011