I need HELP. Each year I receive an "annual Notice of Reportable Income" from a life insurance policy I have that forms part of my companies Profit Sharing Plan. It states that " We are providing you with reportable income amounts for each [participant under this retirement plan. As plan administrator, the internal revenue service requires that you report these amounts to each participant and the IRS using Form 1099-R.
For a self employed owner employee, the reportable income amount shown ($3,674) is not tax deductible. To determine the deductible contribution for an owner-employee, subtract the reportable income amount from the annual contribution.
Thats all I get from the life insurance company.
So my question is this: I pay $3,904 annually for the life insurance policy that is part of my profit sharing plan. I receive NO physical distribution of money and yet each year I receive the same notice as stated above. Is the $3,674 taxable, despite me never receiving any actual income from this notice?
