A Practical Guide to Accounting for Loan Regime Split Dollar Arrangements

Loan Regime Split Dollar arrangements have received a lot of publicity recently as an attractive alternative to traditional Supplemental Executive Retirement Plans and other forms of non-qualified deferred compensation, especially among non-profit organizations seeking possible relief from the new 21% excise tax.  Among the frequently cited benefits of such arrangements are the relatively favorable accounting treatment and disclosure requirements.  However, those potential advantages may not be realized unless the program is properly structured and managed.

EBS’ guide provides a detailed discussion of loan regime split dollar arrangements and their related accounting treatment.  Two hypothetical examples are presented that help illustrate the key considerations that drive accounting treatment.  There is also a discussion of the use of AFR versus market interest rates, and 990 disclosure requirements.

A look inside:

  • Background
  • Current Accounting Treatment
  • Tax Classification
  • GAAP Classification
  • Arrangements That Meet “Loan” Criteria
  • Arrangements That Do Not Meet “Loan” Criteria
  • Recognition and Valuation of the Loan Regime Split Dollar Asset
  • Hypothetical Accounting Examples
  • Other Accounting and Tax Issues to Consider
  • Form 990
  • Proxy
  • Bottom Line


We’ve also put together a brief video discussing the use of a split dollar plan, which you can view now.

If you are considering the use of a loan regime split dollar arrangement, we invite you to review our white paper, “A Practical Guide to Accounting for Loan Regime Split Dollar Arrangements.” It will provide clarity of the accounting and disclosure issues, and guidance as to the most favorable plan design.