Under IRC §79, employer-paid group term life insurance coverage up to what face amount is generally not includable in the employee's gross income?

Why D is correct

IRC §79 provides that the cost of the first $50,000 of group term life insurance provided by an employer is excluded from the employee's gross income. Coverage above $50,000 creates a taxable economic benefit to the employee, calculated using IRS-published uniform premium rates rather than the actual premium. The exclusion applies to group term life coverage and does not depend on the employee's age, health, or length of service. This threshold is one of the most frequently tested tax figures in the life insurance area and is equally important in employee-benefit planning.

Why the other options are wrong

• A) $10,000 is a limit associated with some other benefits contexts, such as certain de minimis rules, not the group term life threshold; the correct figure is $50,000. The statutory limit is much higher.
• B) $25,000 is not the group term threshold; the statutory exclusion under IRC §79 applies to the first $50,000 of coverage. Double that amount is the actual figure. Choose $50,000 instead.
• C) $100,000 exceeds the statutory amount; coverage over $50,000 is taxable to the employee using the IRS uniform premium rates. Only $50,000 of coverage is free. Excess coverage is taxed instead.

Memory hook

Group term life: the first $50k of employer-paid coverage rides tax-free.