Taxable Excess Life Insurance (TXL)

The excess group term life insurance taxable fringe benefit is for those employees who have more than $50,000 of employer provided group term life insurance.  This taxable fringe benefit will be included on the last payroll of each month.  DSP is using the earnings code of ‘TXL’.  TXL is included in the gross when calculating federal and state taxes, FICA, retirement and unemployment (SUI).  Once the TXL fringe benefit amount is determined, it is used in the calculation of the applicable taxes and benefits, and then removed from the earnings total before the net pay is figured. 
  • TXL is system generated on the last Pay Period of each month. 
  • When TXL is generated, it will default to the active (A or B) PCN with the highest FTI regardless if position has pay.  If the FTI's are equal, such as the case of Multiple PCNs, it will then default to the PCN with the lowest number.
TXL Earnings Description
 
The IRS provides an excess life insurance rate table based on the age of an employee.
 
Age
Factor
5-year age bracket
Cost per $1,000 of protection for one month.
Under age 25
    .05
25 Thru 29
    .06
30 thru 34
    .08
35 Thru 39
    .09
40 Thru 44
    .10
45 Thru 49
    .15
50 Thru 54
    .23
55 Thru 59
    .43
60 Thru 64
    .66
65 Thru 69
$1.27
70 and above
$2.06
 
Calculation and Examples:
 
Employee without Voluntary Term Life:
 
1. Find the Annual Salary:
The hourly rate × the number of hours worked during the year.  *Employee may not work full time.
Example:  $30.00 × 2080 = $62,400.00
 
2. Round that salary to the next highest thousand.
Example:  $63,000.00
 
3. Subtract $50,000.00 from the total salary.
Example:  $63,000.00 - $50,000.00 = $13,000.00
 
4. Divide the difference by 1000.
Example:  $13,000.00 / 1000 = $13.00
 
5. Multiply the answer from Step 4 by the age factor* from the IRS rate table above.  *The age factor is determined by the employee’s age on December 31st of the current calendar year.
Example:  Employee is 32 on 12/31/xx the age factor is .08.
$13.00 × .08 = $1.04
 
TXL = $1.04
 
Employee with Voluntary Term Life (Deduction Codes = 410, 411 or 412):
 
1. Find the Annual Salary:
The hourly rate × the number of hours worked during the year.  *Employee may not work full time.
Example:  $30.00 × 2080 = $62,400.00 
 
2. Round that salary to the next highest thousand.
Example:  $63,000.00
 
3. Because the employee has volunatry life (410) double the salary from Step 2. Multiplier for deduction code 410 = 2, 411 = 3, 412 = 4.
Example:  $63,000.000 + $63,000.00 = $126,000.00
 
4. Subtract $50,000.00 from the total salary.
Example:  $126,000.00 - $50,000.00 = $76,000.00
 
5. Divide the difference by 1000.
Example:  $76,000.00 / 1000 = $76.00
 
6. Multiply the answer from Step 5 by the age factor* from the IRS rate table above.  *The age factor is determined by the employee’s age on December 31st of the current calendar year.
Example:  Employee is 32 on 12/31/xx the age factor is .08.
$76.00 × .08 = $6.08
 
7. Because the employee has voluntary life insurance, subtract the deduction amount the employee pays (410, 411, or 412 Deduction Amount).
Example:  Deduction 410 amount is $5.04.
$6.08 - $5.04 = $1.04
 
TXL = $1.04

ISP/Brands Employee with Police Optional Supplemental Life (Deduction Code = 472):
 
1. Find the Annual Salary:
The hourly rate × the number of hours worked during the year.  *Employee may not work full time.
Example:  $30.00 × 2080 = $62,400.00
 
2. Round that salary to the next highest thousand.
Example:  $63,000.00
 
3. Because the employee has police optional supplemental life (Deduction Code of 472), add $50,000.00 to the salary from Step 2.
Example:  $63,000.000 + $50,000.00 = $113,000.00
 
4. Subtract $50,000.00 from the total salary.
Example:  $113,000.00 - $50,000.00 = $63,000.00
 
5. Divide the difference by 1000.
Example:  $63,000.00 / 1000 = $63.00
 
6. Multiply the answer from Step 5 by the age factor* from the IRS rate table above.  *The age factor is determined by the employee’s age on December 31st of the current calendar year.
Example:  Employee is 32 on 12/31/xx the age factor is .08.
$63.00 × .08 = $5.04
 
7. Because the employee has police optional supplemental life insurance, subtract the deduction amount the employee pays (472 Deduction Amount).
Example:  Deduction 472 amount is $3.39.
$5.04 - $3.39 = $1.65
 
TXL = $1.65