The Internal Revenue Service has issued Form 8925 to report certain employer-owned life insurance contracts pursuant to Code section 6039I as enacted in the Pension Protection Act of 2006. Click here for a copy of Form 8925. Temporary regulations issued in November 2007 made specific provision for this information reporting. Click here for our legal alert on the temporary regulations.
For each tax year ending on or after November 14, 2007, every policyholder owning one or more “employer-owned life insurance contracts” issued after August 17, 2006, must attach Form 8925 to its income tax return. For this purpose, “employer-owned life insurance contract” is defined in Code section 101(j) and generally is a policy:
- Owned by a person engaged in a trade or business and under which that person (or certain related persons) is the direct or indirect beneficiary; and
- Covering the life of a U.S. citizen or resident who is an employee of the applicable policyholder on the date of contract issuance. “Employee” includes an officer, director, or highly compensated employee under Code section 414(q).
Form 8925 reports, among other things, the number of employees covered by such employer-owned life insurance contracts and whether each employee provided advance written consent to be insured and for the coverage to continue after termination of employment. (Where those consents are obtained, the section 101(j) limitation on the exclusion of death proceeds from the policyholder’s taxable income is inapplicable in certain circumstances, based on the status of the insured or the payment of death proceeds to heirs of the insured.)