Page 39 - SIH 2022 Re-Enrollment Guide
P. 39
2022
SIH Benefits Re-Enrollment
IMPUTING TAXABLE INCOME FOR GROUP TERM
LIFE INSURANCE
Under the tax law, the value of employer-provided group term life insurance in excess of $50,000 is taxable.
The $50,000 threshold is not indexed for inlation. This value is referred to as “imputed income.” Any change
to your salary, if over $50,000, will result in a change to your imputed income within the pay period that the
change occurred.
The IRS has developed a table to value the cost of employer-provided group term life insurance. Beneit
professionals refer to this as “Table I.” As illustrated below, the cost is valued based on 5-year age brackets.
Table I is not updated annually by the IRS (the last update was in 1999).
Table I—Uniform Premium for Example: Al, age 26, has $70,000 of employer-
$1,000 of Group Term Life Insurance provided coverage. To determine imputed income,
Protection we subtract $50,000 from the total amount of
Cost Per $1,000 of Protection for 1-Month coverage and divide that amount by $1,000. Then,
Age of Employee
Period we apply the Table I rate of $0.06 per $1,000 of
Under 25 $0.05 coverage to determine the amount of monthly
25–29 $0.06 imputed income. In this example, monthly imputed
30–34 $0.08 income is $1.20.
35–39 $0.09
40–44 $0.10 $70,000 - $50,000 = $20,000 ($20,000 ÷ $1,000 =
45–49 $0.15 $20)
50–54 $0.23 $20 × $0.06 (Table I rate) = $1.20
55–59 $0.43
60–64 $0.66 The amount of imputed income is shown in box 12
65–69 $1.27 on the W-2 with the code “C.”
70 and Above $2.06
39
SIH Benefits Re-Enrollment
IMPUTING TAXABLE INCOME FOR GROUP TERM
LIFE INSURANCE
Under the tax law, the value of employer-provided group term life insurance in excess of $50,000 is taxable.
The $50,000 threshold is not indexed for inlation. This value is referred to as “imputed income.” Any change
to your salary, if over $50,000, will result in a change to your imputed income within the pay period that the
change occurred.
The IRS has developed a table to value the cost of employer-provided group term life insurance. Beneit
professionals refer to this as “Table I.” As illustrated below, the cost is valued based on 5-year age brackets.
Table I is not updated annually by the IRS (the last update was in 1999).
Table I—Uniform Premium for Example: Al, age 26, has $70,000 of employer-
$1,000 of Group Term Life Insurance provided coverage. To determine imputed income,
Protection we subtract $50,000 from the total amount of
Cost Per $1,000 of Protection for 1-Month coverage and divide that amount by $1,000. Then,
Age of Employee
Period we apply the Table I rate of $0.06 per $1,000 of
Under 25 $0.05 coverage to determine the amount of monthly
25–29 $0.06 imputed income. In this example, monthly imputed
30–34 $0.08 income is $1.20.
35–39 $0.09
40–44 $0.10 $70,000 - $50,000 = $20,000 ($20,000 ÷ $1,000 =
45–49 $0.15 $20)
50–54 $0.23 $20 × $0.06 (Table I rate) = $1.20
55–59 $0.43
60–64 $0.66 The amount of imputed income is shown in box 12
65–69 $1.27 on the W-2 with the code “C.”
70 and Above $2.06
39
