Meifaba

Archive for May, 2010

If your company owns life insurance policies on your executives or any key people for that matter, you need to be aware of the potential tax ramifications and the requirements to avoid taxation of benefits. Important changes have taken place in the last few years that can significantly impact the taxation of corporate owned life insurance. The information below is designed to inform you of the IRS regulations that have been implemented over the last few years and what is needed to comply with these IRS requirements so that policy proceeds avoid needless taxation.*

Pension Protection Act of 2006 and Life Insurance Taxation

On August 17, 2006, President George Bush signed tax legislation containing provisions that significantly impact key man and other employer owned life insurance purchased after August 17, 2006. The legislation, known as the COLI (Corporate Owned Life Insurance) Best Practices Act (which is part of the Pension Protection Act of 2006), includes the proposed IRC Section 101(j). Under this proposed law, life insurance death benefits for business-owned life insurance policies issued after the effective date of August 17, 2006 are income taxable (to the extent the death benefit exceeds the employer’s premiums) unless certain requirements are met.



This new legislation applies to all employer-owned policies issued after August 17, 2006 and includes policies used for key man insurance, stock redemption plans, Corporate Owned Life Insurance and Supplemental Executive Retirement Plans (among others). It may also extend to collateral assignment (economic benefit) regime split dollar and split dollar loans. With this law, all situations where an employer will have full or partial ownership of a insurance policy that is issued after August 17, 2006, regardless of the purpose of the policy, will need to meet certain requirements and follow specific guidelines to avoid potential taxation.

Avoiding Taxation of Key Man Life Insurance

In order to prevent policy proceeds (death benefits) from being income taxable, both of the following requirements must be met:

1. Notice and Consent Requirements:

a) The employee must be notified (in writing), prior to the life insurance policy being issued, that the employer intends to buy a policy on his/her life and disclose what the maximum face amount that is being applied for on his/her life is;

b) The employee must provide written consent to being insured and agree that the employer may choose to keep the policy in force even after the employee separates employment; and

c) The employee must be notified in writing that the employer is the beneficiary of all or part of the death benefit proceeds.

Under the COLI Best Practices Act, unless the employer provides written notice and obtains the employee’s written consent prior to the issuance of the policy, the death benefit of the life insurance policy will be taxable from day 1. Notice and consent may not be obtained after the life insurance policy is issued to remove this taxable death benefit status.

2. Once the “Notice and Consent Requirements” are met, there are two “Exceptions” to the rule taxing death proceeds payable to an employer, one of which must be met:

a.) Exception #1:

1) The insured was an employee at any time during the 12-month period before the insured’s death OR

2) The insured was a Director or “highly compensated employee” at the time the contract was issued.

b.) Exception #2:

Any amount received by the employer as a result of the insured’s death is paid to:

1) A family member of the insured;

2) A designated beneficiary of the insured under the contract other than the employer;

3) A trust established for the benefit of a family member, other designated beneficiary, or the insured’s estate; or

4) A family member, designated beneficiary, trust, or estate in exchange for any interest they hold in the corporation / employer (i.e. buy-sell agreement).

If both the “Notice and Consent Requirements” and one of the “Exceptions” above are met, Corporate Owned Life Insurance proceeds would be received income tax free if the policy death benefits would otherwise be eligible for favorable tax treatment.

COLI Best Practices Act- Reporting Requirements

All employers are required to report annually all corporate-owned life insurance policies to the IRS. The annual reporting requirements imposed under the IRC Sec. 6039I include:

1) The total number of employees at the end of the year;

2) The number of employees insured under COLI arrangement at the end of the year;

3) The total amount of insurance in force on all insured employees at the end of the year; and

4) The employer’s name, address, tax payer identification number and type of business, and

5) A statement of valid consent for each insured employee (or, if all required consents are not obtained, number of insured employees for who consent was not obtained).

The IRS requires this reporting annually on Form 8925 ” Report of Employer-Owned Life Insurance Contracts.” It is a simple form and must be completed to comply with IRS Code. You should consult your CPA or professional tax advisor immediately for more information on Form 8925 and the IRS reporting requirements.

If proper record keeping and reporting is not maintained, any and all key man life insurance policy proceeds or other corporate owned life insurance death benefits may be subject to income taxation

In Conclusion

Corporate Owned Life Insurance Policies including key man insurance policies issued after August 17, 2006 may have death benefits that are subject to income taxation if certain requirements are not met. The Pension Protection Act of 2006, which includes the COLI Best Practices Act, includes provisions that have significant consequences for key man and other employer owned insurance purchased after August 17, 2006. You need to understand the Notice and Consent requirements and well as the Exceptions and Record Keeping and Reporting requirements and comply with the IRS so that key man insurance policy proceeds avoid needless taxation. Unfortunately, if you have a key man policy issued after August 17, 2006 and you have not been compliant, your best bet to avoid potential income taxation may be to scrap your current policy and start over!

* All of the above tax information is for information purposes only and is provided to explain the basic tax treatment of life insurance based on the Internal Revenue Code. Any individual or entity considering any life insurance policy should consult with their own CPA or tax/legal advisor that understands their particular tax circumstances and the rules governing their state. In no way is this information intended to be tax or legal advice.

BEANS? Good for you? “yes” Low in fat? “yes” Full of fiber? “yes” – but fast and simple to prepare? “Absolutely.”

Since I started researching legumes (beans, peas and lentils) more than 10 years ago, I’ve come to realize what an important food source they are. Now I want everyone to know how good they are for you, how easy to prepare and how tasty they can be. Another plus is they are far easier on our environment than animal protein.

In an earlier article I talked about some of the benefit of beans i.e. they likely lower the risk of heart disease and some forms of cancer.

Here’s why beans are so good for you. They are:

Low in fat

Do you know that healthy eating is the main key to a healthier lifestyle? You are what you eat. By eating the right food, and having a balanced diet, you are on the right direction to live a very healthy life. But not everyone really knows how to choose the right diet, or just do not bother, due to their busy life. Well, busy is just an excuse. It is not that difficult, really, Let me show you how you can eat right in your daily life.

Having a good breakfast in the morning is very important. This is the best way to eat healthy. You should try to stick to the healthy food in the morning. This would include things like toast, eggs, fruit, cereal and oatmeal. These items will give you the kick that you need to have a great day ahead.

Avoid eating at fun fair or sporting events as it will get you out of your healthy eating habits. You will find that there are many things that are not good for you. The hot dogs, the hamburgers and the candy are such a temptation. You will really have to use your willpower and try to stay away from the things that are bad for you. Or you can always take some food with you that are better for you and healthier at the same time.

Want your clothes to fit your body better? You will have to eat healthier. Getting a start with your eating habits will allow your clothes to fit you better in all the right areas. You may even be able to wear a smaller size. You will see that your pants will be bigger on you and your shirts will need to be taken in. This is a great accomplishment that you can be proud of.

Being informed about what you are eating is important. You need to watch your labels and make sure that you know what you are putting in your mouth. The one thing that you can do for yourself is to check out what is in your food. This will help you better understand the things that are good for you and the things that are bad for you.

Everyone loves ice cream. You will find that there are plenty of healthy ice creams that you can buy for you to eat too. You will see that there are fat free and sugar free ice creams for you to purchase. These ice creams great taste and will be healthier for you at the same time.

There are so many fruits that you can eat to be healthy. Eating fruits when you are hungry is a good way to keep the weight off and to make you feel better at the same time. You will also get a better complexion too. What you eat will affect the way that your skin looks. You have to make sure that you are eating healthy so that your skin will look its best as well.

Lastly, it is also a good idea to try not to eat after nine at night. If you are feeling hungry later on in the evening, you may want to have a healthy snack. This may include anything from pretzels to yogurt. There are plenty of good and healthy foods that you can eat so that they do not stick to your body and make you gain weight.

So you see, it is not difficult to eat healthy. In fact, you can do that everyday! With just some change, and some efforts, you will definitely create the healthy body you ever want.

You only live once and you want to make sure that you lead a long and fruitful life. So many people neglect their health, taking for granted that they will live to a ripe old age and are suddenly surprised when a health issue crops up.

Good health is not a given but it isn’t that hard to keep yourself on a healthy lifestyle path. Making small changes can lead to huge improvements in your well being.

Of course, diet and exercise are at the forefront. We need to make sure that we are eating healthy and getting exercise on a regular basis. You can’t drive your car without putting gas in it, so don’t try and push your body without eating regularly.

Getting enough sleep is another key element. Your body requires rest to recuperate from its long rough day and 3 or 4 hours a day is just not sufficient. Aim to get 7 hours of sleep per night, if you sleep well you’ll find that you can easily lose a few pounds almost effortlessly.

Drinking water is vital in keeping healthy. It is recommended to drink 8 8oz glasses of water a day. Once you get accustomed to drinking this amount you will find that you actually miss the water. It helps to keep the body hydrated and functioning properly. Drinking enough during the warm summer months will prevent sunstroke and headaches.

As we age our body changes and so do our bodily requirements. As we get older we find that we may need to sleep longer or eat a little less. Pay attention to what your body is trying to tell you. It’s those small first signs that can help prevent a disease from becoming full blown.

No one wants to be diagnosed with cancer or diabetes only to be told that if you had done certain things, or taken some precautions early on you would not be suffering the consequences now.
Use that sunscreen when out in the hot sun to prevent skin cancer.

Get regular checkups and monitor your blood pressure and cholesterol to prevent diabetes.
Stay in shape by just enjoying regular walks to keep your body physically healthy, it doesn’t take that much time and effort.

We have all been told to plan ahead for our retirement. Let’s make sure our bodies are in good shape so that we can really enjoy our retirement years with our spouse and grandchildren.

When was the last time you went shopping for foods high in omega 3 fatty acids? Have you ever wondered which foods contain omega3 and are the best?

In this article, I’ll point you to nutrition foods high in essential fatty acids your body needs.Yes, fatty fish are excellent for omega-3s.

But, so are other foods researchers found that also help maintain a healthy lifestyle. Foods high in omega 3 that help prevent cancers, high blood pressure and aid different ailments like asthma, anxiety, allergies and depression.

Foods High in Omega 3 Fatty Acids

People who consume more omega-3 are healthier compared to those who are omega3 deficient. So, here are some super foods rich in omega3 essential fats:

o Fish — fatty fish such as salmon, mackerel, herring, hoki and tuna. A very healthy choice since fatty fish are rich in omega3 fats. In fact, nutritional experts recommend you eat one to two fatty fish meals per week.

o Vegetables — various leafy greens for salad, spinach and squash contain omega-3s, but broccoli and cauliflower are the two when it comes to having high omega-3.

o Beans — also known as legumes, also are a source. Beans to look for are kidney, mungo and pinto since they’re loaded with omega-3.

o Nuts and Seeds — numerous nuts to throw into salads or baking that are omega3 rich are walnuts, almonds and hazelnuts. Or seeds such as sesame, pumpkin and flexseeds.

o Meats — when it comes to deciding on which meat to eat, try and find either chickens that have been fed a diet of fish oils and greens or grass fed beef.

In todays processed world, trying to find and eat foods high in omega 3 fatty acids may be a bit difficult. The fish you think are fresh most likely swam in polluted waters.

And, no one wants to consume large quantities of healthy omega3 rich oils, nuts and seeds because they do contain a lot of fat. As for the healthy greeens, it’s difficult to eat enough of them for the essential fatty acids.

Don’t get me wrong, omega3 essential fatty acids found in these food are extremely important. Therefore, you might also want to look into topping up your diet with a high-quality omega-3 supplement which has been purified to ensure it’s safe, effective and a pharmaceutical grade high-quality product.

Now that you are armed with this information, you’ll be able to combine foods high in omega 3 essential fatty acids and supplements to achieve the best results. Now is the time to take control and enjoy your healthy lifestyle.

Visit my website today if you’re interested in learning more about essential fatty acids in high-quality omega3 supplements I use and recommend.

Brushing your teeth regularly and correctly is very essential in taking good care of your teeth. It reduces the amount of germs building up in your mouth. After all, your mouth is residence to hundreds of bacteria that can be only removed with regular brushing after every meal. Toothbrush can be home to various microorganisms after sometime. It is equally important to change your toothbrush periodically.

The American Dental Association (ADA) and the ADA Council on Scientific Affairs give several tips on brushing.

First and foremost, don’t share your toothbrush with anybody else even to your spouse. It is similar to passing colds or flu to someone. Sharing toothbrushes may result in accidental exchange of bodily fluids thus can cause infection.

Rinse your toothbrush very well with water after each use to take out any residual toothpaste and other remains.

Keep your toothbrush in a vertical stance and let it to air dry. When storing multiple brushes, leave gaps between brushes to prevent germs from being spread from one toothbrush to another.

Do not keep a toothbrush in an airtight container nor cover toothbrushes because moist is a good environment for germs to grow.

Replace toothbrush every three months. Inspect your brush regularly for signs of tattered bristles. Replace more often for kids.

Caring for your toothbrush is just part of keeping a good oral habit. Brushing the right way is also very important.

Brush your teeth every after meals using toothpaste containing fluoride. Fluoride protects gums and teeth.

Choose a toothbrush with a soft bristle. This is gentler to gums. Never do harsh scrubbing because it can irritate your gums.

Brush your teeth by holding your toothbrush at a slight angle against your teeth and use short back-and-forth motions. Brush the inside and the chewing surfaces of your teeth.

It takes two minutes to brush effectively so don’t rush. Brush your tongue also. Many germs are accumulated here. Consider using an electric toothbrush, particularly if you have arthritis or other problems that make brushing difficult. Brushing alone cannot completely clean your teeth and gums. There are germs building up in between your teeth that brushing cannot reach.

Flossing does the job. These are string-like materials inserted between teeth to remove germs building up here. Brushing and flossing always go together. Gargling with commercial mouthwashes also lessen plaques. Also visit the dentist twice a year for checkup and cleaning. Maintain these good habits and you’ll always be ready to flash that perfect smile.