We do not deal with much insurance in pension plans. However, I am taking over a plan that has whole life insurance policies in the plan. The owner is looking to max to the $40k.

Does his premium count against his $40k?

Is there anything else I should I should look for when calculating the % to the NHCE.

Thanks

I am no expert, but it would seem to me it depends on how the premium is being paid. If it's from the plan assets, then obviously it is not a contribution. (Whether the assets are participant directed, and how the earnings are calculated if they are not, would be another issue.) If the premium is being paid from outside money, then it would be a contribution and count against his $40k.

I'd suggest you check the rules on limitations regarding premiums paid on life insurance. It varies by type (whole life, universal life or term). Generally, up to 50% of aggregate contributions can be paid for whole life insurance on a per participant basis. There are special rules for profit sharing plans that can permit larger percentages depending upon how long the money has been in the plan. I don't do much with life insurance so would have to read the rules and get back up to date.

Blinky's post is correct.

Let me know if you need further assistance on life insurance in profit sharing plans.