SENATE FINANCE PASSES COLI COMPROMISE ON VOICE VOTE.Senate Finance Committee Chairman Charles E. Grassley (R-IA) succeeded Feb. 2 in getting a compromise measure through his committee on a voice vote that would restrict the circumstances under which corporate-owned life insurance Corporate-owned life insurance (COLI) is life insurance on employees' lives that is owned by the employer corporation. COLI was originally purchased on the lives of key employees and executives by a company to hedge against the financial cost of losing key employees to benefits would continue to be tax-free. The committee voted to require companies to notify workers they had purchased such COLI COLI Corporate-Owned Life Insurance COLI Cost of Living Index COLI Chemometrics On-line Initiative policies on their behalf and to give workers the opportunity to opt out of participating in the company's COLI program. The committee voted to allow the policies to continue to be tax-free if the benefits went to the employee's family or if the employee could be considered a "key" individual of the company, with compensation of $90,000 or more a year or among the highest-paid quartile Quartile A statistical term describing a division of observations into four defined intervals based upon the values of the data and how they compare to the entire set of observations. Notes: Each quartile contains 25% of the total observations. of the company's employees. The vote was a victory for the American Council of Life Insurers The American Council of Life Insurers (ACLI) is a Washington-based lobbying and trade group for the life insurance industry. ACLI represents 373 insurance companies that account for 93 percent of the U.S. life insurance industry's total assets. , which estimates the annual market for COLIs is $8 billion, about 17 percent of the life insurance market. The COLI provision is attached to the broader pension legislation, now to be considered by the full Senate, that includes a provision allowing workers to sell company stock placed into their 401(k) plans as matching contributions Matching Contribution A type of contribution an employer chooses to make to his or her employee's employer-sponsored retirement plan. The contribution is based on elective deferral contributions made by the employee. after working at the company for three years. The House approved a similar bill, H.R. 1000 last year. |
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