Should cash value of Life Insurance Policy be subject to federal and FICA taxes?
Should cash value of Life Insurance Policy be subject to federal and FICA taxes?
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4 Responses
2.1.2010
Best Answer – Chosen by Voters Only if the cash value is GREATER than what you paid into it – then it becomes a "capital gain" and you pay capital gains tax on the difference between what you paid into it, and what you got out of it. It's NOT subject to FICA. If it were a private policy, I'd say, don't worry about it, because you NEVER get as much cash value out of it, as you've paid into it in premiums over the years, so it's a non-issue. But if it's through your EMPLOYER, then likely they paid a huge hunk of it, and it's a possibility. Source(s): agent, 21+ years
2.1.2010
It depends upon a lot of factors.If it is in a qualified plan then yes it is subject to taxes, except FICA. If it is not in a qualified plan, then to the extent you paid the premiums only gains are subject to taxes and they are taxed as ordinary income, unless the policy qualifies as a "modified endowment contract," which is unlikely.If the employer paid all or part of the premium, then it depends upon how it was taxed from year to year. You really need to ask your employer because the only rule in things like this, is that the rule depends solely upon your employers elections at the time things occured.
2.1.2010
No doubt the easiest way to get insurance quotes is on the web.Why would you waste your time on the phone calling around?the last time i needed quotes on insurance i used one of these comparison sites and it was great.this is the site i used and it was quick like less than 5 mins.The last thing I want to do is listen to elevator music while waiting for a salesman.Anyway I got good quotes and ended up saving money so I was happy.So shop around and compare quotes which is easy on the net.Good starting point is at this site.http://insurance.deal4-you.comGood luck.
2.1.2010
It really depends on how they pull the cash out of the plan. You should get your accountant and a competent insurance agent involved in this discussion.