News & Events

New Reporting Requirements for Employers with Bank Owned Life Insurance

As part of the Corporate Owned Life Insurance best practices legislation of August 2006, which includes Bank Owned Life Insurance, new reporting requirements were established for employers that own BOLI on the lives of their employees.  These reporting requirements, waived for 2006, apply to employer-owned life insurance policies that are subject to Internal Revenue Code Section 101(j).  In November 2007, the IRS issued further guidance regarding these new reporting requirements and, on January 15, 2008, the IRS reporting form was finalized.

Taxpayers who hold employer-owned life insurance contracts that are subject to the requirements of Section 101(j) are required to file Form 8925 with their income tax return for each tax year ending after November 13, 2007.

The information required to be filed includes the following:

1. The number of employees the policyholder had at the end of the tax year.
2. The number of employees included in #1 above who were insured under the policyholder’s employer-owned life insurance contract(s) at the end of the tax year.
3. The total amount of employer-owned life insurance in force at the end of the tax year for employees included in #2 above.
4. Confirmation that the policyholder has a valid consent to insure for each employee included in #2 above.
5. The number of employees included in #2 above for whom the policyholder does not have a valid consent.

BCG will continue to monitor the regulatory environment and provide periodic updates.  In the meantime, you can access the IRS Form 8925 through the following link:
http://www.irs.gov/pub/irs-pdf/f8925.pdf

Nonqualified Benefit Plan Developments:

• Statement of Financial Accounting Standards…SFAS 158, affecting postretirement nonqualified plans that are accounted for under SFAS 87 and SFAS 106, requires that unrecognized accrual costs now be recognized on the balance sheet as an increase in liability and a reduction in stockholder equity. Previously, these costs were recognized on the balance sheet as they were expensed.

• Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements…The Emerging Issues Task Force of Financial
  Accounting Standards Board has determined through issue No. 06-4, that a life insurance contract that endorses a portion of the death benefit to a plan participant does not “settle” the death benefit liability under a split dollar arrangement. Previously, no liability was required to be accrued, based on the assumption that the life insurance contract/carrier would satisfy the future postretirement death benefit obligation. Companies must now accrue and expense a liability, effective December 15, 2007. Yet, no corresponding tax expense or deferred tax asset can be accounted for under FAS 109.

• SEC Disclosure Reporting…For Named Executives participating in a nonqualified defined benefit plan, a restructured table has been established for stating the actuarial value of current benefits. A new separate table for all other nonqualified deferred compensation plans is to be used to disclose participant deferrals, company contributions, earnings, withdrawals/distributions and account balances. In addition to these tables, there should be a narrative description of each plan, provided in plain English. For Directors, companies will need to report all compensation elements in a new table plus a narrative description of each plan.

• Update on Section 409A…The IRS released the final Section 409A regulations on nonqualified deferred compensation plans in 2007, to go into effect on January 1, 2008. However, on October 22, 2007, the IRS released Notice 2007-86. This notice provides additional transition relief regarding the application of Section 409A. Generally, this extends to December 31, 2008, the transition relief that was scheduled to expire on December 31, 2007. This transition relief applies to a number of key facets of nonqualified plans, including transition relief for making changes in the time and form of distribution elections as well as the deadline for the establishment of written plan documents.

Bank Events:

We would like to thank all of those who participated in our Second Annual Bank Consulting Group CEO Golf Outing. The golf outing took place at the Bolingbrook Golf Club. We had almost 20 bank CEOs attend the outing this year. They enjoyed a great day of golf, as well as ample opportunity for getting to know one another. Attendees came from Illinois, Indiana and Michigan, some from far enough away to make it an overnight trip. We plan to move the location next year to accommodate greater attendance of bank CEOs more centrally located to BCG’s widening market area. We will be posting the dates for the 2008 Golf Outing soon, so please check back and reserve your space.

 

Community Events:

Jackson Square Nursing Home
The staff of Bank Consulting Group headed to Jackson Square Nursing Home to play Bingo with the residents on Wednesday, November 7th. Our Team has worked with the staff and residents of Jackson Square off and on for about five years and enjoys the time with them. The opportunity to interact with these residents is an enriching experience for all of us and, we hope, for the staff and residents as well.

Breakthrough Urban Minisries Christmas Party 2007
Bank Consulting Group will be sponsoring the sixth annual Christmas party for the students, volunteers and staff of the Joshua Center’s after school program on December 12th. We will be providing a delicious dinner, followed by many Holiday treats. After dinner, the children will open up presents that were bought using the wish lists they prepared. BCG and the Joshua Center look forward to this celebration each year.