True or false: Excess Group Term Life Insurance is included in W-2 compensation if it exceeds 50,000?

• A. True
• B. False

Answer: (A)

The assertion is true because excess Group Term Life Insurance coverage that exceeds $50,000 is indeed considered taxable income and must be reported in the employee's W-2 compensation. The Internal Revenue Service (IRS) stipulates that the cost of employer-provided group term life insurance coverage above the $50,000 threshold must be included in the employee's taxable income. This requirement is rooted in the tax treatment of fringe benefits, where benefits exceeding a certain threshold become subject to income tax. Therefore, when an employee has coverage beyond the $50,000 limit, the cost of that excess coverage is calculated and reported accordingly on the W-2, making it part of the employee's taxable compensation for the year.