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February 17, 2009

412(i) Plan

Your Guide



A defined benefit plan that is funded with individual insurance (life and/or annuity) contracts.

Also referred to as an Insurance Contract Plan or Fully Insured Plan.

Referring Cite

IRC § 412(i)

Additional Helpful Information

A 412(i) plan may also be funded with group insurance or annuity contract, providing they meet the requirements that are established individual contracts.

According to IRC Section 412 (i), a plan is described as an insurance contract plan if-

  • The plan is funded exclusively by the purchase of individual insurance contracts.

  • Such contracts provide for level annual premium payments to be paid extending not later than the retirement age for each individual participating in the plan, and commencing with the date the individual became a participant in the plan (or, in the case of an increase in benefits, commencing at the time such increase becomes effective),

  • Benefits provided by the plan are equal to the benefits provided under each contract at normal retirement age under the plan and are guaranteed by an insurance carrier (licensed under the laws of a State to do business with the plan) to the extent premiums have been paid,

  • Premiums payable for the plan year, and all prior plan years, under such contracts have been paid before lapse or there is reinstatement of the policy,

  • No rights under such contracts have been subject to a security interest at any time during the plan year, and

  • No policy loans are outstanding at any time during the plan year.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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