Table 2001: Calculate PS 58 Costs in a Few Easy Steps!

Table 2001 is an IRS-published table used to determine the cost of life insurance coverage provided to an individual, particularly when that coverage is part of a qualified plan like a defined benefit plan, 401(k), or split-dollar arrangement.

In this post, we will explain how Table 2001 works and show you the calculation of the PS 58 costs. Let’s jump in!

Purpose of Table 2001

Table 2001 provides standardized annual rates (cost per $1,000 of life insurance protection) based on the attained age of the insured. These rates are used to calculate the “economic benefit”—the taxable portion—of life insurance coverage when:

• The plan or employer owns the policy (not the individual),
• The individual is a beneficiary of the death benefit,
• The coverage exceeds $50,000, or
• The life insurance is held within a qualified retirement plan.

Why It Matters

When life insurance is owned inside a defined benefit or other qualified retirement plan, the pure death benefit protection is considered a current benefit and thus taxable to the participant. The IRS requires this cost to be reported as imputed income, and Table 2001 is the standard way to determine how much.

This amount is called the PS 58 cost, named after IRS section 1.72-16 (formerly Part III, P.S. 58 of IRS guidelines).

How Table 2001 Works

• The table gives an annual cost per $1,000 of coverage, based on the insured’s age.
• For example, a 55-year-old has a rate of $4.15 per $1,000.
• If a participant has a net amount at risk (death benefit minus cash value) of $1 million:
  • $1,000,000 ÷ 1,000 = 1,000 units
  • 1,000 × $4.15 = $4,150 of imputed income for the year

Key Characteristics

• Standardized: Designed to prevent underreporting of insurance benefits.
• Unisex: Does not distinguish between male/female rates.
• Applies regardless of health status: Assumes standard mortality, not underwritten pricing.
• Can be replaced: Some employers or insurers may use carrier-specific term rates if they are lower and properly approved.

Tax Reporting Implications

• Reported as income to the insured.
• Appears on Form W-2 (for employees) or 1099-R (for retirement plan distributions).
• Increases the taxable income for the participant without an actual cash distribution (aka “phantom income”).

When to Use Table 2001

• Life insurance inside a Defined Benefit or Cash Balance Plan
• Split-dollar arrangements
• Business-owned life insurance where the employee is the insured
• Executive compensation plans involving insurance coverage

Table 2001