Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, May 24, 2014

New Regulations Regarding Disability Insurance


The IRS recently issued final regulations regarding the tax treatment of premium payments made by qualified contribution retirement plans for accident or health insurance on behalf of plan participants.  The regulations embody a distinct rule making the purchase of disability insurance by a plan not taxable to participants in specific circumstances.  

This rule applies to a plan’s purchase of disability insurance that would make payments to the plan replace the employer contributions that would have been made by the participant if the participant were not disabled.  Under the rule, a participant would not be taxed on the premiums for this type of disability coverage, or on the disability payments to the plan that are allocated to the participant’s account. 

See New Final Regulations Allow Tax-Free Purchase of Disability Insurance By Plans, Husch Blackwell, May 21, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.


Disability Planning - Health Care, Estate Planning - Generally, Income Tax, New Legislation | Permalink

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