The start of the new year is as good a time as any to look back
at some of the employee benefits regulatory developments of 2014
that were not previously covered in this column.
Disability Insurance Premiums
In May of 2014, the Internal Revenue Service finalized proposed
regulations that had been issued in August of 2007. There was one
important addition to the final regulations.
As a general matter, the payment of accident or health insurance
premiums from a qualified plan is treated as a taxable distribution
to the covered participant. The new rule provides for an exception
to the general rule for "plan contribution replacement"
disability insurance policies. The idea is that if a
participant is unable to work due to a disability, the insurer will
make contributions to the plan to replace the lost deferrals and
employer contributions which were not made due to the
disability. If the policy is qualified, premium payments are
not taxed and the benefits paid are
