Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Imputed Income?? Grrrr.....
Old 12-16-2006, 10:48 AM   #1
Recycles dryer sheets
BOBOT's Avatar
 
Join Date: Aug 2006
Posts: 415
Imputed Income?? Grrrr.....

So with my Sat morning coffee I'm perusing the Retiree Handbook (!) that came yesterday, when I encounter the following regarding the life insurance provided to retirees:

Basic group life insurance is subject to imputed income taxes. This means that if your coverage exceeds $50,000, the value of the coverage in excess of $50k is subject to FICA and federal and state income taxes. The value used to determine imputed income is based on a table provided by the IRS ....

A cursory search of irs.gov was fruitless. Anybody know what the hell this is all about & what kind of hit I can expect? Heck, I might turn down the insurance if they let me...



__________________

__________________
I still don't get it...
BOBOT is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Imputed Income?? Grrrr.....
Old 12-16-2006, 10:55 AM   #2
Thinks s/he gets paid by the post
saluki9's Avatar
 
Join Date: Feb 2005
Posts: 2,032
Re: Imputed Income?? Grrrr.....

Yeah, a corporation is only allowed to deduct the value on $50k of life insurance per employee (unless the insurance is paid to the corp).

As rules usually work, somebody has to pay the tax and that somebody is you. This coverage is usually very cheap and I would not worry about the taxes. The value is usually far in excess of what you will be taxed on because group coverage is cheap

__________________

__________________
saluki9 is offline   Reply With Quote
Re: Imputed Income?? Grrrr.....
Old 12-16-2006, 11:16 AM   #3
Recycles dryer sheets
BOBOT's Avatar
 
Join Date: Aug 2006
Posts: 415
Re: Imputed Income?? Grrrr.....

Oh, so I'm only on the hook for the value of the premium? Ok, that makes sense & isn't a big deal, I agree. Thanks==
__________________
I still don't get it...
BOBOT is offline   Reply With Quote
Re: Imputed Income?? Grrrr.....
Old 12-16-2006, 11:49 AM   #4
Thinks s/he gets paid by the post
saluki9's Avatar
 
Join Date: Feb 2005
Posts: 2,032
Re: Imputed Income?? Grrrr.....

correct, you are taxes as if they had paid the premium to you as ordinary income

__________________
saluki9 is offline   Reply With Quote
Re: Imputed Income?? Grrrr.....
Old 12-16-2006, 05:28 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,537
Re: Imputed Income?? Grrrr.....

Your company should put the amount on your W2. I forget which box.

We pointed this omission out to our company many years ago. They got it straightened out and thereafter started reporting it on our W2.

Audrey
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is online now   Reply With Quote
Re: Imputed Income?? Grrrr.....
Old 12-16-2006, 05:34 PM   #6
Thinks s/he gets paid by the post
saluki9's Avatar
 
Join Date: Feb 2005
Posts: 2,032
Re: Imputed Income?? Grrrr.....

Quote:
Originally Posted by audreyh1
Your company should put the amount on your W2. I forget which box.

1,3,5 & 12 with Code C. Not that any sane human needs to know that

__________________
saluki9 is offline   Reply With Quote
Re: Imputed Income?? Grrrr.....
Old 12-16-2006, 08:53 PM   #7
Recycles dryer sheets
 
Join Date: Sep 2006
Posts: 142
Re: Imputed Income?? Grrrr.....

FYI - Depending on how generous your employer is, and if you're relatively young and in good health, you might do better with your own term life policy anyway.

For most people, the employer provides some free coverage like 1 or 2 x salary, but then you usually need to add more coverage that you have to pay for.

I was amazed that at age 30 I could get a 15-year level-premium term life policy with the same coverage I could get through work for about 10% less money. The savings was ok, but the portability of the coverage was the real driver for me. I let the policy lapse once I got close to being FIRE'd last year since by then I didn't need the coverage.

Anyhow, my policy did its job well and I never had to worry about what would happen to my coverage if I lost my job. Usually employer provided life insurance terminates really fast once you leave work (like maybe the week or month you leave).

Jim
__________________

__________________
magellan_nh is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Shielding income from taxes. modhatter FIRE and Money 26 04-04-2007 10:46 AM
At what age will you take Social Security? retire@40 FIRE and Money 39 10-05-2006 01:58 PM
What type of income fund modhatter FIRE and Money 5 08-31-2006 03:34 AM
What is taxable income? mickeyd Other topics 21 01-29-2005 04:02 PM
Multiple Streams of Income hocus Young Dreamers 30 06-08-2004 09:23 PM

 

 
All times are GMT -6. The time now is 07:28 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.