Pretax Dollars

[orb]

Hubby's employment company recently has been sold. The new owners have retained the old company's name and is trying to keep the two companies separate. However, employee benefits (health, 401K, dental, etc) have been merged with the new company.

The new company will allow the hubby to continue paying the prior life insurance premiums (old company) because they do not work that vendor. Hubby's choices are: 1. Continue the old policy and pay the premium after taxes. 2. Purchase life ins with the new company and utilize the pretax benefit, however he must go through a physical. His health condition has changed.

We are not interested in dropping the prior life insurance. Can the new company refuse to pay this prior insurance with pretax dollars?

 

[fangard]

Hubby's employment company recently has been sold. The new owners have retained the old company's name and is trying to keep the two companies separate. However, employee benefits (health, 401K, dental, etc) have been merged with the new company.

The new company will allow the hubby to continue paying the prior life insurance premiums (old company) because they do not work that vendor. Hubby's choices are: 1. Continue the old policy and pay the premium after taxes. 2. Purchase life ins with the new company and utilize the pretax benefit, however he must go through a physical. His health condition has changed.

We are not interested in dropping the prior life insurance. Can the new company refuse to pay this prior insurance with pretax dollars?

Not sure if the company can refuse or not, but make sure you check with a CPA/Estate Planner to determine if you even want them pretax. Paying premium this way can make some of the death benefit taxable.

 

[LGilmore]

"utilize the pretax benefit"

are you 100% certain his life insurance is subject to any pretax account? The reason I ask is writing the premium off, makes the death benefit taxable income to you. I ask because it would be very unusual for a rank and file employee to have that type of benefit setup.

So are you sure that his life insurance is part of the benefits that can be paid for pre-tax?