8782 / What is a Section 79 plan?

IRC Section 79 allows an employer to provide up to $50,000 of tax-free group-term life insurance coverage to each of its employees.¹ More specifically, the employee may exclude the value of the group-term life insurance that does not exceed the sum of (a) $50,000 and (b) any amount paid by the employee toward the purchase of the insurance.²Group-term life insurance that is excludable under Section 79 can also be offered through a cafeteria plan (see Q 8897).³

See Q 8783 for a discussion of how it is determined whether the value of the insurance exceeds the $50,000 limit and Q 8784 for a discussion of situations in which the $50,000 limit may not apply. See Q 8785 for the nondiscrimination requirements applicable to Section 79 plans.

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1.IRC § 79(a)(1).