GTL-1 Imputed Income — What Employers Must Handle During W-2 Season

What Is GTL-1 Imputed Income?

GTL-1 refers to the taxable imputed income associated with employer-paid Group Term Life Insurance coverage above $50,000.

The IRS allows the first $50,000 of employer-paid group life insurance to be excluded from an employee’s taxable income. Anything above that threshold is taxable and must be calculated using IRS age-based Table I rates.

If you offer life insurance and pay any portion of the premium, this applies to you more often than employers realize.

Why This Matters During W-2 Season

GTL-1 imputed income must be:

• Included in the employee’s taxable wages
• Reflected on the employee’s W-2
• Calculated correctly based on age and months of coverage

This is a year-end requirement, and once W-2s are issued, mistakes turn into:

• Corrected W-2s
• Payroll amendments
• Frustrated employees
• Avoidable compliance exposure

In short: missing GTL-1 creates unnecessary problems.

Who Is Affected?

You likely need to report GTL-1 if:

• The employer pays any portion of group life insurance
• An employee’s coverage exceeds $50,000
• The employee was covered for any part of the calendar year

Common misconception: “The employee pays part of the premium, so it doesn’t apply.”
That’s wrong. The employer-paid portion of coverage over $50,000 is what triggers taxation.

What Employers Should Be Doing Right Now

Before W-2s are finalized, employers should confirm:

1. Which employees exceeded $50,000 in coverage
2. Each employee’s age during the coverage year
3. Months of coverage during the year (including partial years)
4. Correct application of IRS Table I rates
5. Proper inclusion of imputed income in payroll records

If this hasn’t been reviewed yet, you are behind — but it’s still fixable.

Why GTL-1 Is Frequently Missed

GTL-1 falls into the gap between:

• Benefits administration
• Payroll processing
• Tax reporting

Payroll often assumes benefits handled it.
Benefits often assumes payroll knows.
And nobody double-checks until W-2 season hits.

That’s why it gets missed.

Bottom Line

GTL-1 imputed income is mandatory, age-based, and time-sensitive.

If your company offers employer-paid group life insurance and hasn’t explicitly confirmed GTL-1 calculations for the year, now is the time to address it — before W-2s go out or corrections are required.

If you want help validating whether GTL-1 applies to your group or ensuring calculations are correct, get it reviewed before year-end reporting is finalized.