Here’s a morbid bit of creative accounting, courtesy of the Wall Street Journal: if you work for Bank of America, J.P. Morgan Chase, or Wells Fargo, your employer may have taken out a life insurance policy on you.

The insurance policies essentially are informal pension funds for executives: Companies deposit money into the contracts, which are like big, nondeductible IRAs, and allocate the cash among investments that grow tax-free. Over time, employers receive tax-free death benefits when employees, former employees and retirees die.

Update: Here’s a bit more information on the practice, since (as Esquire99 points out below) any policies taken out since 2006 require employee consent.

Efforts to rein in the practice largely have been unsuccessful, including the most recent rules Congress enacted in 2006. The rules limit companies to buying life insurance to just the top third of earners, who must provide consent. But the rules don’t apply to life-insurance that employers bought before the August 2006 rules, which cover millions of current and former employees.

“WSJ: Banks Using Life Insurance Policies…” [Crooks and Liars] (Thanks to Greg!)

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