Question has come up at least twice, and have gotten at least two different answers.

On a plan termination where life insurance is involved, who gets the surrender value, the participant or the plan.

My actuary tells me the insurance is an asset of the trust, and it does not matter whether this is a DB or a DC plan.

Am working on the termination of a DC plan where there are NO participant directed accounts, and an attorney mentioned that the insurance belongs to the account of the participant upon whose life the application was taken.

Which is it?


ST

the insurance can be an investment of the trust. usually is. that means that the cash surrender value of the policy is part of the trust.

but it might also mean that the value of the policy(ies) will be included in the participant values, prorated in some fashion.

The answer, as is usually the case, depends on the plan provisions.

One way to help tell whether you should credit the trust or credit the participant is to look back and see if the trust prorated the premiums, or if they came from one participant only.

That may help you decided as well.