Frequently Asked Questions
Who is eligible for the Charitable Beneficiary Life Insurance Exclusion?
A person described in section 170(c) (charity) must be the sole beneficiary of the insurance portion for the entire taxable period.
How does the Charitable Beneficiary Life Insurance Exclusion work?
Excludes the cost of group-term life insurance from income if a charitable organization is the sole beneficiary of the policy for the entire year.
What law authorizes the Charitable Beneficiary Life Insurance Exclusion?
The Charitable Beneficiary Life Insurance Exclusion is authorized under IRC §79(b)(2) of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §79
Source: Internal Revenue Code, Title 26, United States Code
§ 79. Group-term life insurance purchased for employees(a) General ruleThere shall be included in the gross income of an employee for the taxable year an amount equal to the cost of group-term life insurance on his life provided for part or all of such year under a policy (or policies) carried directly or indirectly by his employer (or employers); but only to the extent that such cost exceeds the sum of—(1) the cost of $50,000 of such insurance, and
(2) the amount (if any) paid by the employee toward the purchase of such insurance.
(b) ExceptionsSubsection (a) shall not apply to—(1) the cost of group-term life insurance on the life of an individual which is provided under a policy carried directly or indirectly by an employer after such individual has terminated his employment with such employer and is disabled (within the meaning of section 72(m)(7)),
(2) the cost of any portion of the group-term life insurance on the life of an employee provided during part or all of the taxable year of the employee under which—(A) the employer is directly or indirectly the beneficiary, or
(B) a person described in section 170(c) is the sole beneficiary,
for the entire period during such taxable year for which the employee receives such insurance, and
(3) the cost of any group-term life insurance which is provided under a contract to which section 72(m)(3) applies.
(c) Determination of cost of insuranceFor purposes of this section and section 6052, the cost of group-term insurance on the life of an employee provided during any period shall be determined on the basis of uniform premiums (computed on the basis of 5-year age brackets) prescribed by regulations by the Secretary.
(d) Nondiscrimination requirements(1) In generalIn the case of a discriminatory group-term life insurance plan—(A) subsection (a)(1) shall not apply with respect to any key employee, and
(B) the cost of group-term life insurance on the life of any key employee shall be the greater of—(i) such cost determined without regard to subsection (c), or
(ii) such cost determined with regard to subsection (c).
(2) Discriminatory group-term life insurance planFor purposes of this subsection, the term “discriminatory group-term life insurance plan” means any plan of an employer for providing group-term life insurance unless—(A) the plan does not discriminate in favor of key employees as to eligibility to participate, and
(B) the type and amount of benefits available under the plan do not discriminate in favor of participants who are key employees.
(3) Nondiscriminatory eligibility classification(A) In generalA plan does not meet requirements of subparagraph (A) of paragraph (2) unless—(i) such plan benefits 70 percent or more of all employees of the employer,
(ii) at least 85 percent of all employees who are participants under the plan are not key employees,
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