by lisadiane777 » Sat Jun 26, 2010 11:16 am
For a retirement reasons a policy was taken for me with a payout of 300,000 at 15 years of service and more if by retirement age. My age is 56 and do to down sizing they let me go and paid out the 300,000 . I said was this being paid by the insurance company , no I'll cut you a check next week out of payroll and you'll need to pay taxes, so we'll deduct the taxes out and I received 2 months ago a net payout of $209,000. I assumed the policy is null and void; but it may not and I'm concerned. So I sent a letter this week to the Massachusettes based life insurance company requesting a status of this policy and to make a cancellation of this policy. I had the policy number from the lab testing paper work and do not have a copy of the policy, I was clear on my being no longer an employee of the policy holder. What suggestions do you have? I do not want this former employer to have life insurance interest on me.
Posted: Thu Jul 01, 2010 03:00 pm Post Subject:
At the 35% marginal tax rate, the tax is 35% on income in excess of AGI $373.650 . . . +$108,421.25 for a single filer, +$101,085.50 for married/joint, +$105,095 for head of household, and if married filing separately, 35% on income exceeding $186,825 +$50,542.75. So I have no idea where one would think there is only a tax liability of $25,000. Re-read the tax tables.
Umm, you need to read what I typed:
Even if the OP earns $100k for the year that would only make a little more than $25k subject to 35% in tax liability...
I never said the tax liability would be $25k I said the amount of income taxed at 35% would only be a little over $25k. Assuming she earned $100k in addition to this distribution. Now, I've also made the assumption that she does not file seperately while married because it's an extremely limited use filing status where generally the only reason to do it is avoid possible liability for incorrect tax filings on your spouse's behalf.
Now lets look at the numbers you've posted, and keep in mind, this is a marginal system.
Let's assumed married filing jointly, it doesn't really matter much as the numbers aren't all that different in this case. Total tax liability for ever dollar earned prior to breaking the 35% margin at $373,650 is $101,085.5. OP was entitled to a $300k payout of which she received just over $200k. She's already most likely been withholding some degree of taxes, but the nearly $100k that was withheld from the NQDC payment almost completely statisfies her tax liability. My point is that she's not a chronically deficit in tax withholdings as you have made it seem.
Now, depending on what state she lives in, she may want to spend some time thinking about state income tax liabilty.
Again, it's not impossible for her to remain below the 35% tax bracket, and even if she does break through it only income earned from the standpoint of her AGI is subject to 35% in tax liability. We are half way through the year, she stated that she has taken a job at a reduced salary. She was unemployed for a little while. She has $60,000 in the bank waiting to see how her taxes end up.
What she needs to do is ensure that her new employer is correctly withholding for her. And she'll need to make a change at the start of next year, when her income goes down.
It's also entirely possible that her new income levels will subject her to AMT, which might not be a bad thing since the top marginal AMT rate is 28%. Either way her AGI will be high enough to force filing form 6251 to determine AMT liability, so the real winner here is the accountant, he or she is going to be making more money this year.
Posted: Sun Jul 25, 2010 06:37 pm Post Subject: empoyersi life nsurance on emplyees
"Dead Peasants Life Insurance"? Ghoulish... and there will be regulations soon , I hope and work for, against people as commodities. Disguesting.
Posted: Mon Jul 26, 2010 02:21 am Post Subject:
There's a big difference between keyman insurance and/or non-q deferred comp and "dead peasant" insurance. Juxtaposing the two in this nature and trying to draw similarities is neither accurate nor appreciated, thanks.
Posted: Mon Jul 26, 2010 02:23 pm Post Subject:
"Dead Peasants Life Insurance"? Ghoulish... and there will be regulations soon , I hope and work for, against people as commodities. Disguesting.
Please locate my response to your similar rant about "Dead Peasant Indurance" [sic] in the Auto Insurance forum.
Posted: Sat Jul 31, 2010 07:31 am Post Subject: absolute possible
main sres president
Posted: Sat Jul 31, 2010 07:32 am Post Subject: points consensus
external windows gps down
Posted: Sun Nov 14, 2010 05:40 am Post Subject:
Does this Life policy his Ex Employer ownes on him affect his insurability. You have to have enough assets to establish an insurable interest. Kinda down the 'rabbit hole' but just wondering.
Posted: Sun Nov 14, 2010 03:47 pm Post Subject:
You have to have enough assets to establish an insurable interest.
Having or not having assets DOES NOT create a condition of insurable interest. Any life agent knows that. Insurable interest in life insurance means to have a "pecuniary" interest in the life/work/income of a human being. We all have "unlimited" insurable interest in our own lives (but that does not mean we can have as much life insurance as we want).
Employer-owned life insurance does not necessarily affect the amount of insurance a person may obtain on an individual basis. If they have no interest in the employer's policy (unlike a split dollar plan, or a collateral assignment), it should not affect their limit of coverage at all -- that money does not come to their beneficiary in the event of their death.
On the other hand, a person who commits an individual policy to a life settlement provider necessarily interferes with their future insurability. To what extent? Only the new insurer can tell you.
Posted: Wed Jun 10, 2015 10:25 pm Post Subject:
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