258 / Are premiums that an employer pays on group permanent life insurance for its employees deductible by the employer?

Yes, if each employee’s right to the insurance on his or her life is non-forfeitable when the premiums are paid.

If an employee has only a forfeitable right to the insurance, an employer cannot deduct premium payments.

If an employee’s rights change from forfeitable to non-forfeitable, an employer may deduct the fair market value of the policy in the employer’s taxable year in which or with which ends the employee’s tax year in which the employee’s rights become non-forfeitable, and the fair market value ( Q 144) of the policy is includable in the employee’s gross income.¹