Imputed Income (Additional Taxable Income)
Your Group Life Insurance will be taxable income if the amount for which you are insured exceeds $50,000. Note: Imputed income increases with age. See IRS table, used nationwide, of age-related insurance costs printed below. If your coverage is a multiple of salary, the IRS insurance costs will also rise proportionately with each salary increase you receive. This is another reason for evaluating your choices periodically.
Selecting the $10,000 or $50,000 option will avoid taxable income. However, you should make your choices carefully as there may be reasons for choosing higher levels of insurance. The University's program offers choices so that you can take all your needs into consideration when selecting this coverage.
Choosing either "two times salary" or "four times salary" can result in additional taxable income. The $100,000 option also results in taxable income. In deciding on your coverage, you should compare your need for life insurance over $50,000 to the consequences of any increased tax liability the excess coverage might trigger. Again, it is advisable to review your options frequently--particularly at the age groups where significant increased insurance costs occur. The University reports the taxable value (from the IRS table of insurance costs) on your W-2 form at the end of each calendar year.
IRS Insurance Costs Table (First $50,000 Excluded)
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