Page 53 - 2020 Publication 17

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Table 5-1. Cost of $1,000 of Entire cost excluded. You aren’t taxed on the Exclusion limit. The exclusion for commuter
Group-Term Life Insurance for 1 cost of group-term life insurance if any of the vehicle transportation and transit pass fringe
Month following circumstances apply. benefits can’t be more than $270 a month.
1. You’re permanently and totally disabled The exclusion for the qualified parking fringe
Age Cost and have ended your employment. benefit can’t be more than $270 a month.
If the benefits have a value that is more than
Under 25 . . . . . . . . . . . . . . . . . $ 0.05 2. Your employer is the beneficiary of the these limits, the excess must be included in
25 through 29 . . . . . . . . . . . . . . 0.06 policy for the entire period the insurance is your income.
30 through 34 . . . . . . . . . . . . . . 0.08 in force during the tax year.
35 through 39 . . . . . . . . . . . . . . 0.09 3. A charitable organization (defined in Pub. Commuter highway vehicle. This is a high-
40 through 44 . . . . . . . . . . . . . . 0.10 526, Charitable Contributions) to which way vehicle that seats at least six adults (not in-
45 through 49 . . . . . . . . . . . . . . 0.15 contributions are deductible is the only cluding the driver). At least 80% of the vehicle's
mileage must reasonably be expected to be:
50 through 54 . . . . . . . . . . . . . . 0.23 beneficiary of the policy for the entire pe-
55 through 59 . . . . . . . . . . . . . . 0.43 riod the insurance is in force during the tax • For transporting employees between their
60 through 64 . . . . . . . . . . . . . . 0.66 year. (You aren’t entitled to a deduction for homes and workplace, and
65 through 69 . . . . . . . . . . . . . . 1.27 a charitable contribution for naming a • On trips during which employees occupy at
70 and above . . . . . . . . . . . . . . 2.06 charitable organization as the beneficiary least half of the vehicle's adult seating ca-
of your policy.) pacity (not including the driver).
Example. You are 51 years old and work 4. The plan existed on January 1, 1984, and: Transit pass. This is any pass, token, fare-
for employers A and B. Both employers provide card, voucher, or similar item entitling a person
group-term life insurance coverage for you for a. You retired before January 2, 1984, to ride mass transit (whether public or private)
the entire year. Your coverage is $35,000 with and were covered by the plan when free or at a reduced rate or to ride in a com-
employer A and $45,000 with employer B. You you retired, or muter highway vehicle operated by a person in
pay premiums of $4.15 a month under the em- b. You reached age 55 before January the business of transporting persons for com-
ployer B group plan. You figure the amount to 2, 1984, and were employed by the pensation.
include in your income as shown in Worksheet employer or its predecessor in 1983.
5-1. Figuring the Cost of Group-Term Life Insur- Qualified parking. This is parking provided to
ance To Include in Income—Illustrated next. Entire cost taxed. You’re taxed on the entire an employee at or near the employer's place of
cost of group-term life insurance if either of the business. It also includes parking provided on
Worksheet 5-1. Figuring the following circumstances apply. or near a location from which the employee
commutes to work by mass transit, in a com-
Cost of Group-Term Life • The insurance is provided by your em- muter highway vehicle, or by carpool. It doesn’t
Insurance To Include in ployer through a qualified employees' trust, include parking at or near the employee's
Income—Illustrated such as a pension trust or a qualified annu- home.
ity plan.
Keep for Your Records
• You're a key employee and your employ-
1. Enter the total amount of er's plan discriminates in favor of key em- Retirement Plan
your insurance coverage ployees. Contributions
from your
employer(s) . . . . . . . . . . . . 1. 80,000 Your employer's contributions to a qualified re-
2. Limit on exclusion for Retirement Planning Services tirement plan for you aren’t included in income
employer-provided
group-term life insurance Generally, don’t include the value of qualified at the time contributed. (Your employer can tell
coverage . . . . . . . . . . . . . . 2. 50,000 retirement planning services provided to you you whether your retirement plan is qualified.)
3. Subtract line 2 from and your spouse by your employer's qualified However, the cost of life insurance coverage in-
line 1 . . . . . . . . . . . . . . . . . 3. 30,000 retirement plan. Qualified services include re- cluded in the plan may have to be included. See
4. Divide line 3 by $1,000. tirement planning advice, information about Group-Term Life Insurance, earlier, under
Figure to the nearest your employer's retirement plan, and informa- Fringe Benefits.
tenth . . . . . . . . . . . . . . . . . 4. 30.0 tion about how the plan may fit into your overall If your employer pays into a nonqualified
5. Go to Table 5-1. Using your individual retirement income plan. You can’t ex- plan for you, you must generally include the
age on the last day of the tax clude the value of any tax preparation, account- contributions in your income as wages for the
year, find your age group in ing, legal, or brokerage services provided by tax year in which the contributions are made.
the left column, and enter the
cost from the column on the your employer. However, if your interest in the plan isn’t trans-
right for your age ferable or is subject to a substantial risk of for-
group . . . . . . . . . . . . . . . . 5. 0.23 Transportation feiture (you have a good chance of losing it) at
6. Multiply line 4 by the time of the contribution, you don’t have to in-
line 5 . . . . . . . . . . . . . . . . . 6. 6.90 If your employer provides you with a qualified clude the value of your interest in your income
7. Enter the number of full transportation fringe benefit, it can be excluded until it’s transferable or is no longer subject to a
months of coverage at this from your income, up to certain limits. A quali- substantial risk of forfeiture.
cost . . . . . . . . . . . . . . . . . . 7. 12 fied transportation fringe benefit is:
8. Multiply line 6 by For information on distributions from
line 7 . . . . . . . . . . . . . . . . . 8. 82.80 • Transportation in a commuter highway ve- TIP retirement plans, see Pub. 575, Pen-
9. Enter the hicle (such as a van) between your home sion and Annuity Income (or Pub. 721,
premiums you paid and work place, Tax Guide to U.S. Civil Service Retirement Ben-
per month . . . . . 9. 4.15 efits, if you’re a federal employee or retiree).
10. Enter the number • A transit pass, or
of months you paid • Qualified parking.
the Elective deferrals. If you’re covered by certain
premiums . . . . . 10. 12 Cash reimbursement by your employer for kinds of retirement plans, you can choose to
11. Multiply line 9 by these expenses under a bona fide reimburse- have part of your compensation contributed by
line 10 . . . . . . . . . . . . . . . . 11. 49.80 ment arrangement is also excludable. However, your employer to a retirement fund, rather than
12. Subtract line 11 from line 8. cash reimbursement for a transit pass is exclud- have it paid to you. The amount you set aside
Include this amount in able only if a voucher or similar item that can be (called an elective deferral) is treated as an em-
your income as exchanged only for a transit pass isn’t readily ployer contribution to a qualified plan. An elec-
wages . . . . . . . . . . . . . . . 12. 33.00 available for direct distribution to you. tive deferral, other than a designated Roth

Chapter 5 Wages, Salaries, and Other Earnings Page 49