IQVIA Benefits Handbook
TAX TREATMENT OF LIFE INSURANCE BENEFITS
While you are participating in the plan, any basic life insurance amounts above $50,000 are considered imputed income and subject to imputed income taxes, as shown in the following table.
Imputed Income
If your basic life insurance coverage exceeds $50,000, the value of the amount of coverage that exceeds $50,000 is considered "imputed income," and subject to imputed income taxes. The monthly value used to determine imputed income is based on a table provided by the IRS, not by IQVIA or Lincoln. The total imputed income is reported each year on your W-2 and you pay taxes on this amount.
To calculate the value of your basic life insurance:
  • Subtract $50,000 from your total insurance coverage.
  • Divide by $1,000.
  • Multiply by the appropriate age-related monthly IRS Uniform Premium Rates. (To determine your Premium Rate, the IRS uses your age at the end of the calendar year.)
For example, assume that you are a 45 year-old IQVIA employee with $85,000 in basic coverage. According to the IRS imputed income tax table, the monthly value of your coverage amount is $.15 per $1,000 of coverage. Using the calculation above, here's how your imputed income would be determined:
  • $85,000 – $50,000 = $35,000
  • $35,000 ÷ $1,000 = 35
  • 35 × $.15 = $5.25
This means that you would pay taxes on an additional $5.25 per month. Assuming a 30% tax bracket, this means $1.58 would be withheld monthly from your paycheck for taxes.
Contact your tax advisor or personal financial planner if you have questions about imputed income.
In general, life insurance proceeds are not subject to federal income taxes. Some exceptions may apply. In addition, other taxes, such as estate taxes, may be applicable. You may want to consult with your tax advisor regarding the proper tax treatment of any payment you or your beneficiary receives.