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How Do I…
Handle the Tax Treatment of
SDB Premium Contributions?

There are some instances when the Supplemental Death Benefit becomes taxable — when it becomes a “fringe benefit.”

The Supplemental Death Benefit (SDB) in TMRS is considered to be similar to proceeds from a group-term life insurance program. As such, coverage provided to an employee in excess of $50,000 from group-term life insurance may be considered taxable compensation to the employee.

City payroll officers should refer to this useful publication, released by the IRS in 2014, and refer to page 15 to find the reference to handling Group-term Life Insurance.

Federal, State and Local Governments – Quick Reference Guide for Public Employers.