A participant's spouse received life insurance death benefits from his policy held within the plan. I understand that the difference between the proceeds and the cash surrender value are non-taxable, since PS-58 costs have been paid. The cash surrender value is not being rolled over. My questions are:

1) What is reported on the 1099-R issued by the plan? Just the cash surrender value in the total distribution and taxable distribution amounts (which makes sense since the plan didn't receive and distribute the total death benefit)? Or are the total proceeds reportable as the total distribution, and the cash surrender value reported as the taxable amount?

2) Will the insurance company attempt to report anything on a 1099-R directly, and we should make sure they don't? We're having a difficult time obtaining the cash surrender value at the time of payment from them, which makes me wonder if they don't understand that the plan has to issue the 1099-R.

Thanks

The total distribution should be reported...by someone. You probably need to talk to the insurance company (good luck!) about what they think they are supposed to do, and whether or not they will actually do it.



Are you saying the ins. co paid the at-risk portion directly and the CSV portion went to the plan? That would be...interesting; you probably meant something else?