How does 401k Secure® work?
- A 401k or profit sharing plan can purchase disability insurance in an amount equal to a plan participant's annual contribution
- The insurance policy is owned by the trust and premiums are paid from trust assets without imputed income to the plan participant.
- When the employee becomes disabled the insurance benefit is paid to the 401k trust and then allocated directly to the disabled participant's account.
- Premiums can be paid from one or more of the following:
- The participant's account balance
- The trust as an administrative expense
- The employer's matching or profit sharing contribution
- An additional employer contribution
- Plan forfeitures
