Life Insurance in DB Plans

[Iggy]

I'm fairly new to the small plan world. When they talk about DB plans funded or partially funded by life insurance, do they necessarily mean 412(i) plans?

Who owns the policy(s)? Are they on the life of the owner? Who is usually the beneficiary?

Any resources out there that describe further details? As I've heard these can be complex.

Thanks

[Wigmeister General]

http://www.calcpa.org/content/25274.aspx

[Salmon Hatchery]

The DB plans I deal with are of both 412(e)3 (formerly 412i) and tradtional DB variety. With 412(e)3 the plan is funded SOLEY with annuities and life insurance contracts. With a tradtional DB plan, you can have life insurance in the name of the trust as well as other investments. In this case you still need a schedule A and for valuation purposes, the value of the insurance is just the cash surrender value.

With a trad. DB plan, you don't have to specify how much each participant gets in insurance benefits (unless legally outlined)

For 412(e)3 plans, the insurance is funded by the fiduciary in the name of the participant. The beneficiary is named when purchasing the life insurance.

[Duffer]

With a trad. DB plan, you don't have to specify how much each participant gets in insurance benefits (unless legally outlined)



You have to comply with document rules, and can only vary the amount if a participant is uninsurable. These benefits are supposed to be definitely determinable.