New Reporting Requirements for Employer-Owned Life Insurance

Outlined below are the reporting requirements for Employer Owned Life Insurance policies. The rules are not new but are often not adhered to. As part of our tax preparation this year we will be asking for the information outlined below for all applicable policies. If you have any questions about your policies call us.

Generally, a policyholder owning one or more employer-owned life insurance contracts issued after August 17, 2006, is required to file Form 8925 for each tax year the contract(s) is owned. For life insurance contracts issued before Aug. 18, 2006, there were no reporting rules applicable to employer-owned life insurance contracts. Form 8925 is filed with the employer’s annual income tax return. The following information must be reported on Form 8925:

• The total number of employees at the end of the tax year.
• The number of employees insured at the end of the tax year under employer-owned life insurance contracts issued after August 17, 2006.
• The total amount of employer-owned life insurance in force on those employees at the end of the tax year.
• Indication that the “applicable policyholder” has a valid consent for each insured employee (or, if all required consents are not obtained, the number of insured employees for whom consent was not obtained).