Benefit News

Employers who maintain Corporate-Owned Life Insurance/Bank-Owned Life Insurance (COLI/BOLI) contracts will use simple form for reporting.

January 17, 2008 - The IRS released a final version of Form 8925 for Reporting COLI/BOLI contracts in response to the IRC Section 101(j) "COLI Best Practices" under the Pension Protection Act of 2006.

Section 101(j) of requires that, in order for the proceeds from employer-owned life insurance contracts to be tax free, the policy must satisfy certain statutory requirements. In general, section 101(j) permits the tax-free receipt of life insurance policy proceeds by such an employer if, for example, the insured is, at the time of policy insurance, a director, highly compensated employee or highly compensated individual.

Employers who own COLI/BOLI contracts will most likely file 8925 annually, beginning with the 2007 tax year. Even if the filing due date changes, policyholders are required to keep records necessary to determine whether the requirements of IRC Section 60391 and Section 101(j) have been met.

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