GROUP TERM LIFE INSURANCE Editor’s Note: The applicability date of the fiduciary rule was repeatedly delayed, finally being vacated entirely by the Fifth Circuit. As of the date of this publication, the DOL’s new prohibited transaction exemption (PTE) 2020-02 replaces the 2016 rule. The exemption closely follows the basic concepts of the original rule. It remains uncertain how this new standard will impact advisors who sell life and disability insurance. See Q 3982 for details.

While advisors who provide advice relating to health savings accounts were to be covered by the Department of Labor’s heightened fiduciary standard, certain related products, such as disability and term life insurance policies, were expressly excluded from the definition of investment property and were thus not subject to the fiduciary standard. This would have been the case to the extent that these products do not contain an investment component. As a result, presumably, permanent life insurance policies that did contain an investment component would have been subject to the DOL fiduciary rule.¹

1. 29 CFR § 2 2510.3-21(g)(4).

An employer may provide employees with up to $50,000 of group term life insurance protection each year without cost to employees. The taxable value of group term insurance in excess of the exclusion amount generally is determined under a table (Table I) provided by the IRS (Q 246). The exclusion generally is not available unless the insurance provided under the plan satisfies the definition of group term life insurance (Q 241, Q 244). If insurance provided does not meet the definition of group term life insurance, an employer’s premium cost is includable in employee income.

If a plan provides group term life insurance that is discriminatory, the exclusion is not available to key employees (Q 249). The taxable cost to a key employee of the entire amount of insurance under a discriminatory plan is the higher of the actual cost or the cost under Table I.

A premium paid by an employer is deductible. Group term life insurance may be provided under term policies or under policies providing a permanent benefit (Q 254). An employer also may provide permanent life insurance to employees on a group basis (Q 257, Q 258).

A death benefit of group life insurance, whether term or permanent, generally is excludable from a beneficiary’s income (Q 259).

For group term life insurance to qualify for special tax exclusion by employees, the life insurance must meet the following four conditions:

General Death Benefit

First, it must provide a general death benefit that is excludable from gross income under IRC Section 101(a). Under the regulations, travel insurance and accident and health insurance including amounts payable under a double indemnity clause rider do not provide a general death benefit.¹ Employer contributions for these benefits are contributions to a health plan under IRC Section 106 instead of Section 79 (Q 8789).

Group of Employees

Second, it must be provided to a group of employees as compensation for personal services performed as employees. A group of employees are all of the employees of an employer, or fewer than all if membership in the group is determined solely on the basis of age, marital status, or factors related to employment including membership in a union, duties performed, compensation received, and length of service. See Q 242 for a detailed discussion of the group requirement.

Employer Provided Policy

Third, the insurance must be provided under a policy carried directly or indirectly by an employer. A policy meets this requirement if an employer pays any part of the cost, directly or through another person, or arranges for payment by employees and charges at least one employee less than his or her Table I cost and at least one other employee more than his or her Table I cost. The policy can be a master policy or a group of individual policies.

Regulations define the term policy as including all obligations of an insurer that are offered or that are available to a group of employees because of the employment relationship, even if they are in separate documents.² An employer may elect to treat obligations not providing permanent benefits as separate policies if the premiums are properly allocated. An employer also may elect to treat an obligation providing permanent insurance as a separate policy if:

(1)    the employee buys the policy directly from the insurer and pays the full cost;

(2)    the employer’s part in the sale is limited to selection of the insurer, the type of coverage, and certain sales assistance, such as providing employee lists to the insurer, permitting use of the employer’s premises for solicitation, and collecting premiums through payroll deduction;

(3)    the obligation is sold on the same terms and in substantial amounts to individuals who do not purchase, and whose employers do not purchase, any other obligations from the insurer; and

(4)    no employer-provided benefit is conditioned on purchase of the obligation.³

Computed under a Formula

Fourth, the amount of insurance provided each employee must be computed under a formula that precludes individual selection of such amounts. The formula must be based on factors such as age, years of service, compensation, or position. This requirement may be satisfied even if the amount of insurance provided is determined under alternate schedules based on the amount each employee elects to contribute. The amount of insurance under each schedule must be computed under a formula that precludes individual selection.

Where one factor, percentage of compensation, of a two factor formula covered all employees but one, and the other factor, position, applied to only one position held by only one individual, the president, the Tax Court held that the formula did not preclude individual selection of jumbo coverage for the president.⁴

On the other hand, a formula based on positions that included several individuals in each category was held to preclude individual selection.⁵

Where the amount of an employee’s insurance protection under a group program is reduced by the amount of the employee’s death benefit under the employer’s pension plan, the group protection is not group term life insurance because the formula for determining the amount is based on a factor other than, and not comparable to, age, years of service, compensation, or position.⁶

A provision in a group term life insurance plan that offered employees the option to reduce their coverage by certain amounts, but not below $50,000, was found not to preclude individual selection of the insurance amounts.⁷

Instead of a lump sum settlement of death benefits, an employer may select payment of equal installments over a fixed period of time without affecting the plan’s status as group term life insurance.⁸

Federal group term life insurance covering federal civilian employees qualifies as group term life insurance.⁹

Term life insurance to be provided after retirement that is offered by certain educational institutions under a cafeteria plan is treated as group term life insurance (Q 3501).¹⁰

If employer-provided term life insurance does not qualify as group term insurance, the premium paid by the employer is includable in the employee’s income.¹¹

If an insurer providing group term life insurance also makes available a permanent benefit to members of the group because of the employment relationship, see Q 254.

1.          Treas. Reg. §1.79-1(f)(3).

2.          Treas. Reg. § 1.79-0.

3.          Treas. Reg. § 1.79-0.

4.          Towne v. Comm., 78 TC 791 (1982). See also Whitcomb v. Comm., 84-1 USTC ¶ 9472 (1st Cir. 1984).

5.          N.W.D. Investment Co. v. Comm., TC Memo 1982-564.

6.          Let. Rul. 8342008.

7.          Let. Ruls. 9701027, 9319026.

8.          Rev. Rul. 77-163, 1977-1 CB 18.

9.          Rev. Rul. 55-357, 1955-1 CB 13.

10.        IRC § 125(d)(2)(C).

11.        Treas. Reg. § 1.61-2(d)(2)(ii)(A); Let. Rul. 8636018.

In order to qualify as group term life insurance, the benefits must be provided to a group of employees as compensation for personal services performed as employees. A group of employees are all of the employees of an employer, or fewer than all if membership in the group is determined solely on the basis of age, marital status, or factors related to employment including membership in a union, duties performed, compensation received, and length of service.

The purchase of something other than group term life insurance generally is not a factor related to employment. For example, credit life insurance provided to all employees who purchase automobiles is not provided to a group within the definition, because membership is not determined solely on the basis of age, marital status, or factors related to employment.

Participation in an employer’s pension, profit sharing, or accident and health plan is considered a factor related to employment, even if employee contributions are required. Ownership of stock in an employer corporation is not a factor related to employment. Participation in an employer’s stock bonus plan, however, may be a factor related to employment. A group of employees may include stockholder-employees, other than more-than-2 percent shareholders in an S corporation.^[1] If a group of employees consists of fewer than 10 employees, see Q 244.

A person is an employee if his or her relationship to the person for whom services are performed is that of employer-employee, or if he or she formerly performed services as an employee, except to the extent the person currently performs services as an independent contractor.^[2] Insurance on the life of a self-employed person, whether he or she is the employer or someone who performs services for the employer as an independent contractor, is not excludable. Thus, insurance for a partner or sole proprietor is not excludable even though he or she is included in the coverage for employees.

S corporation employees who own more than 2 percent of the outstanding stock or more than 2 percent of the total voting power of the S corporation are treated as partners; therefore, insurance is not excludable to the extent it covers such stockholders.^[3] Other S corporation employees may take the exclusion.

Insurance provided for an individual in his or her capacity as a corporate owner or as a director does not qualify for the exclusion.^[4]

Insurance for a commission salesperson is not excludable unless an employer-employee relationship exists between the salesperson and the company that pays the premiums.^[5] Full-time life insurance salespersons who are classified as employees for Social Security purposes are considered employees for group term.^[6]

1.          Treas. Reg. § 1.79-0.

2.          Treas. Reg. § 1.79-0.

3.          IRC § 1372.

4.          Whipple Chrysler-Plymouth v. Comm., TC Memo 1972-55; Enright v. Comm., 56 TC 1261 (1971).

5.          Rev. Rul. 56-400, 1956-2 CB 116; see also IRC § 3508.

6.          IRC § 7701(a)(20); Treas. Reg. § 1.79-0.

Supplemental group term life insurance paid for entirely by employees was not considered group term life insurance under IRC Section 79 where the supplemental policy and the basic group term life insurance paid for by the employer were not considered the same policy because they were provided by unrelated insurers.¹

Where employee-paid supplemental group term life insurance was purchased from the same insurer providing basic employer-paid group term life insurance, the supplemental and basic coverages were treated as one policy under IRC Section 79. Because premiums were allocated properly, the employer could elect to treat the coverage as three separate policies (basic coverage, supplemental smoker coverage, and supplemental nonsmoker coverage) for purposes of deciding whether the policies were carried directly or indirectly by the employer. Thus, the employees had no imputed income from the supplemental coverage.²

In another private ruling, supplemental life insurance coverage offered by a VEBA was considered part of an employer’s policy issued by the same insurer, but the employer could elect to treat it as a separate policy because there were no permanent benefits and the premiums were properly allocated between the VEBA’s supplementary coverage and the employer’s coverage. The coverage under the VEBA’s policy was not provided directly or indirectly by the employer because the employer was not paying any part of the coverage and because all rates charged the participants were less than the Table I rates.³

In a similar situation, a supplemental employee group term life insurance program provided through a VEBA was not treated as a policy carried directly or indirectly by an employer. Thus, assuming that the employer elected to treat its basic life insurance program and its supplemental group term insurance as separate policies, no income was imputed to employees under IRC Section 79(a) who purchased supplemental coverage.⁴

1.          Let. Rul. 8518037. See also Let. Rul. 8820022.

2.          Let. Ruls. 9227019, 9149033. See also Let. Rul. 200033011.

3.          Let. Rul. 8906023.

4.          Let. Ruls. 9611058, 9549029, 201350032.

Yes.

As a general rule, life insurance provided to a group cannot qualify as group term life insurance for income tax purposes unless, at some time during the calendar year, it is provided to at least 10 full-time employees who are members of the group of employees of the employer.

Insurance for fewer than 10 employees, however, may qualify as group term life insurance if:

(1)    it is provided for all full-time employees; and

(2)    the amount of protection is computed either as a uniform percentage of compensation or on the basis of coverage brackets established by an insurer under which no bracket exceeds 2½ times the next lower bracket and the lowest bracket is at least 10 percent of the highest bracket. Eligibility and amount of coverage may be based on evidence of insurability but determined solely on the basis of a medical questionnaire completed by the employee and not requiring a physical examination.¹ Additional voluntary medical information may not be made the basis of a premium rate determination.²

For the purposes of determining how many are included in a group, and if all of them are eligible, employees who elect not to receive insurance are considered included even if they would have to contribute toward the cost of term insurance. If an employee must contribute to the cost of benefits other than term insurance, such as permanent benefits, to get term insurance, the employee is not counted in determining if term life insurance is provided to 10 or more employees if the employee declined the term insurance.³

Although bona fide brackets that are temporarily empty probably do not disqualify a plan, a bracket not used since a plan’s inception the previous year was disregarded in one case with the result that protection provided in the bracket immediately above was more than 2½ times that provided in the bracket immediately below.⁴

If evidence of insurability is not a factor, then insurance not meeting the above requirements, which provides protection for fewer than 10 full-time employees, may nevertheless qualify if: (1) it is provided under a common plan to employees of two or more unrelated employers, and (2) insurance is restricted to, but mandatory for, all employees of an employer who belong to or are represented by a particular organization, such as a union that carries on substantial activities other than obtaining insurance.

Insurance for fewer than 10 full-time employees will not be disqualified merely because, under the terms of a policy, no insurance is provided for those employed less than six months or who are part-time employees, that is, whose customary employment is not more than 20 hours per week or five months in any calendar year, or those who are age 65 or older.⁵

For purposes of determining how many employees are provided insurance, all life insurance provided under policies carried by an employer is taken into account even if the policies are with different insurers.⁶ This gives support to the concept that supplemental coverage for fewer than 10 may be superimposed on an existing group term life insurance program covering more than 10 employees without taking into consideration the special requirements for groups of fewer than 10.⁷

1.          Treas. Reg. § 1.79-1(c).

2.          Rev. Rul. 75-528, 1975-2 CB 35.

3.          Treas. Reg. § 1.79-1(c)(5).

4.          Rev. Rul. 80-220, 1980-2 CB 35.

5.          Treas. Reg. § 1.79-1(c)(4).

6.          Treas. Reg. § 1.79-1(c).

7.          See also Rev. Rul. 70-162, 1970-1 CB 21.

Yes.

Premiums paid by an employer for group term insurance on the lives of employees are deductible.¹ This is so even if a plan discriminates in favor of key employees (Q 249).

A corporation may deduct premiums it pays for coverage on the lives of commission salespersons irrespective of whether an employer-employee relationship exists between the salesperson and the corporation.²

No deduction will be allowed for the cost of coverage on the life of an employee if an employer is directly or indirectly a beneficiary under a policy.³

If group term proceeds are to be used to fund a buy-sell agreement between stockholders of a corporation, the IRS may deny the corporation a business expense deduction for its premium payments (Q 299).

Contributions will not be deductible unless, when considered with all an employee’s other compensation, they are reasonable (Q Q 3519).

Current deduction of contributions to a welfare benefit fund (Q 4090) to provide group life insurance to employees is strictly limited. Contributions to a welfare benefit fund to provide life insurance benefits to employees are subject to certain requirements (Q 4092).

1.          IRC § 162(a); Rev. Rul. 56-400, 1956-2 CB 116.

2.          Rev. Rul. 56-400, supra.

3.          IRC § 264(a).

The cost of up to $50,000 of group term life insurance coverage generally is tax-exempt. The cost of coverage in excess of $50,000 is taxable to employees. An employee who is working for more than one employer must combine all group term coverage and is entitled to exclude the cost for no more than $50,000. If an employee contributes toward the cost of the insurance, all of the employee’s contribution for coverage up to $50,000 and for excess coverage is allocable to coverage in excess of $50,000. In other words, the employee may subtract his or her full contribution from the amount that would otherwise be taxable to the employee.¹ The employee cannot carry over from year to year any unused portion of his or her contributions.

The cost of coverage in excess of $50,000, which is the amount that is taxable to an employee, is to be calculated on a monthly basis. The steps are as follows:

(1)    Find the total amount of group term life insurance coverage for the employee in each calendar month of the employee’s taxable year, and if a change occurs during any month, take the average at the beginning and end of the month;

(2)    subtract $50,000 from each month’s coverage;

(3)    to the balance, if any, for each month, apply the appropriate rate from the tables of monthly premium rates (below);

(4)    from the sum of the monthly costs, subtract total employee contributions for the year, if any.²

The cost is determined on the basis of the life insurance protection provided to an employee during the employee’s tax year, without regard to when the premiums are paid by an employer.

To compute the cost of excess group term life insurance coverage, the rates in the table immediately below should be used.³

*In using the above table, the age of the employee is the employee’s attained age on the last day of the employee’s taxable year.

The exemption of the cost of up to $50,000 of group term life is not available with respect to group term insurance purchased under a qualified employees’ trust or annuity plan. The provisions of IRC Section 72(m)(3) and Treasury Regulation Section 1.72-16 apply to the cost of the protection purchased under qualified plans and no part of the cost is excludable from an employee’s gross income (Q 3940).⁴

Premiums for supplemental insurance in excess of $50,000 provided by an employer under a group term insurance plan are not taxable to an insured employee when paid by a family member to whom the employee has assigned the insurance.⁵ If the cost of the coverage in excess of $50,000 is shared by an employer and assignee, the employer’s portion of the cost is includable in the insured employee’s gross income.⁶

The exemption for the first $50,000 is not available to key employees if a plan discriminates in their favor (Q 249).

1.          IRC § 79(a).

2.          Treas. Reg. § 1.79-3.

3.          Treas. Reg. § 1.79-3(d)(2).

4.          IRC § 79(b)(3); Treas. Reg. § 1.79-2(d).

5.          Rev. Rul. 71-587, 1971-2 CB 89.

6.          Rev. Rul. 73-174, 1973-1 CB 43.

Group term coverage on the lives of an employee’s spouse and dependents is not included in the otherwise applicable $50,000 exemption (see Q 246). The cost of this coverage will be income-tax free, however, if the face amount does not exceed $2,000.¹ In determining whether coverage in excess of $2,000 is excludable from income as a de minimis fringe benefit, only the excess of the cost over the amount paid by the employee on an after tax basis for the coverage is taken into consideration.

In one case where dependent group term life insurance was available to employees through a voluntary employees’ beneficiary association (“VEBA”) and the employer’s only role in the arrangement was to provide administrative services as an independent contractor, the life insurance coverage was not a fringe benefit subject to taxation under Treasury Regulation Sections 1.61-21 or 1.61-2(d)(2)(ii)(b). No amount was therefore includable in employees’ income.²

Where an employer’s group term life insurance plan permits employees to extend group life benefits to domestic partners and their dependents, the cost of this group term coverage is not excludable from income under either IRC Section 79 or IRC Section 132(a)(4). Rather, the Table I cost of the coverage is includable in an employee’s gross income under IRC Section 61.³

1.          Notice 89-110, 1989-2 CB 447.

2.          Let. Ruls. 9549029, 9151033.

3.          Let. Rul. 9717018.

There are certain exceptions to the $50,000 ceiling on tax-exempt coverage discussed in Q 246. The cost of group term life insurance, even for amounts over $50,000, is tax-exempt:

(1)    to a former employee who (x) has terminated his or her employment as an employee with the employer and has become permanently disabled, (y) has terminated his or her employment on or before January 1, 1984, and was covered by the plan or by a predecessor plan when he or she retired if the plan was in existence on January 1, 1984, or the plan is a comparable successor to such a plan, or (z) who has terminated his or her employment as an employee after January 1, 1984, having attained age 55 on or before January 1, 1984, and having been employed by the employer at any time during 1983 if the plan was in existence on January 1, 1984, or the plan is a comparable successor to such a plan, unless the individual retires under the plan after 1986 and the plan is discriminatory after that date not taking into account insurance provided to employees who retired before January 1, 1987;

(2)    if a charitable organization is designated as beneficiary, where this designation may be made with respect to all or any portion of the proceeds, but no charitable contributions deduction is allowable for such a designation; or

(3)    if an employer is beneficiary, unless the employer is required to pay proceeds over to an employee’s estate or beneficiary.¹

Any contribution toward group term life insurance, but not toward permanent benefits, made by an employee during a taxable year generally reduces, dollar for dollar, the amount that otherwise would be included in the employee’s gross income for term insurance. No reduction is permitted, however, for a prepayment made by an employee for coverage after retirement or for payments allocable to insurance where the cost is not taxed because of one of the foregoing exceptions.²

1.   IRC § 79(b); Treas. Reg. § 1.79-2; TRA ’84 § 223(d), as amended by TRA ’86, § 1827(b)(1); Temp. Treas. Reg. § 1.79-4T, A-1. See also Let. Rul. 9149010.

2.   Treas. Reg. §§ 1.79-2(a)(2), 1.79-3(g)(2).

If a plan covers any key employees and the plan discriminates in favor of them either as to eligibility to participate or with respect to the kind or amount of benefits, the key employees may not exclude the cost of the first $50,000 of coverage. A key employee in a discriminatory plan must include the higher of the actual cost or the specified uniform premium Table I cost (Q 246). Employees who are not key employees may exclude the cost of $50,000 of coverage even if a plan is discriminatory.¹ For a discussion of when a group term life insurance plan will be found to be discriminatory, see Q 250.

A key employee essentially is the same as a key employee in a top heavy plan (Q 3926). A key employee is an employee who, at any time during the employer’s tax year was:

(1)    an officer of an employer having annual compensation greater than $220,000 in 2024 (up from $215,000 in 2023, $200,000 in 2022 and $185,000² in 2020 and 2021). Not more than the greater of three individuals or 10 percent of the employees need be considered officers, but in any event no more than 50 individuals may be considered officers;

(2)    a more-than-5 percent owner of an employer; or

(3)    a more-than-1 percent owner, determined without considering those employees who are not counted in testing for discriminatory eligibility, having an annual compensation from an employer of more than $150,000.³

A key employee also is any former employee who was a key employee when he or she retired or separated from service.⁴

For purposes of determining corporate ownership, the attribution rules of IRC Section 318 apply. Rules similar to the attribution rules apply to determine non-corporate ownership as well in calculating attribution, although a 5 percent ownership test will apply rather than a 50 percent test.

In determining the percentages of ownership, only the particular employer is considered; other members of a controlled group of corporations or businesses under common control and other members of an affiliated service group are not aggregated. They are aggregated, however, for purposes of determining the employee’s compensation and in testing for discrimination.⁵

Exemption for Church Plans

Church plans for church employees are exempt from nondiscrimination requirements. A church plan generally is one established by a church or convention or association of churches that is tax-exempt under IRC Section 501(c)(3). A church employee includes a minister, or an employee of an organization that is tax-exempt under IRC Section 501(c)(3), but does not include an employee of an educational organization above the secondary level, other than a school for religious training, or an employee of certain hospital or medical research organizations.⁶

1.     IRC § 79(d).

2.     Notice 2019-59, Notice 2020-79, Notice 2021-61, Notice 2022-55, Notice 2023-75.

3.     IRC § 416(i)(1)(A).

4.     IRC § 79(d)(6).

5.     IRC § 414(t); Temp. Treas. Reg. § 1.79-4T, A-5.

6.     IRC § 79(d)(7).

A plan is considered discriminatory in favor of key employees with respect to eligibility to participate unless:

(1)    it benefits at least 70 percent of all employees;

(2)    at least 85 percent of participants are not key employees;

(3)    the plan benefits a class of employees found by the IRS not to be discriminatory; or

(4)    if the plan is part of a cafeteria plan, the requirements for cafeteria plans are met (Q 3501).¹

Individuals who do not need to be counted include:

(1)    employees with fewer than three years of service;

(2)    part-time and seasonal employees;

(3)    employees excluded from a plan who are covered by a collective bargaining agreement if group term life insurance was the subject of good faith bargaining, and

(4)    certain nonresident aliens.²

Benefits are discriminatory unless all benefits available to key employee participants are available to all other participants.³ Benefits are not discriminatory, however, merely because the amount of insurance bears a uniform relationship to the total compensation of employees, or to their basic or regular rate of compensation.⁴

All policies providing group term life insurance to a key employee or key employees carried directly or indirectly by an employer will be considered a single plan for purposes of determining whether an employer’s group term insurance plan is discriminatory. An employer may treat two or more policies that do not provide group term life insurance to a common key employee as constituting a single plan.⁵

1.      IRC § 79(d)(3)(A).

2.      IRC § 79(d)(3)(B).

3.      IRC § 79(d)(4).

4.      IRC § 79(d)(5).

5.      Temp. Treas. Reg. § 1.79-4T, A-5.

Yes. The cost of group term life insurance that is includable in the gross income of the employee is considered wages subject to Social Security tax.¹

The general rule is that an employee may exclude the cost of the first $50,000 of employer-provided group term life insurance from income (Q 246). Therefore, only the cost of coverage in excess of $50,000 generally will be subject to the Social Security tax.

An employer is required to report amounts includable in the wages of current employees for purposes of the Social Security tax on employees’ W-2 forms. An employer generally may treat wages as though paid on any basis so long as they are treated as paid at least once each year.²

Social Security tax must be paid by an employee if a payment for group term life insurance is considered wages and is for periods during which there is no longer an employment relationship between the employer and the employee. An employer is required to separately state the portion of an employee’s wages that consist of payments for group term life insurance and the amount of Social Security tax.³

1.          IRC § 3121(a)(2).

2.          Notice 88-82, 1988-2 CB 398.

3.          IRC § 3102(d).

The cost of excess group term life insurance is not subject to withholding, but an employer that provides excess coverage must file an information return for each calendar year and must provide statements to employees receiving the excess coverage. Each employer reports as if it were the only employer carrying group term insurance on an employee.¹

An employer that maintains a group term life insurance plan is required to file an information return with the IRS indicating the number of its employees, the number of employees eligible to participate in the plan, the number of employees participating in the plan, the cost of the plan, the taxpayer identification number of the employer and the type of business in which it is engaged. The employer also must report on the return the number of its highly compensated employees, the number of highly compensated employees eligible to participate in the plan, and the number of highly compensated employees actually participating in the plan.² For plan years beginning prior to the issuance of further guidance from the IRS, group term life insurance plans are not required to meet the reporting requirements of IRC Section 6039D.³

1.          IRC § 6052(a).

2.          IRC § 6039D.

3.          Notice 90-24 1990-1 CB 335, as modified by Notice 2002-24, 2002-1 CB 785.