Split Dollar Life Insurance

“Why Non-Profits Are So Interested in Split Dollar Life Insurance—Should You Be, Too?”

The 2017 Tax Cuts and Jobs Act imposed a new 21% excise tax on compensation paid by a non-profit organization on compensation in excess of $1 million, and on “excess parachute payments.” The apparent Congressional intent was to create a degree of symmetry with the $1 million deduction limitation on publicly-traded corporations. However, it has further complicated compensation planning among non-profit organizations and placed them at an even greater competitive disadvantage in their attempt to attract and retain talented executives and professionals.

In our latest and highly detailed white paper, “Why Non-Profits Are So Interested in Split Dollar Life Insurance—Should You Be, Too?” we tackle how to work around this tax hit to keep the playing field level between non-profits and for-profits as you compete for professional talent.

A look inside:

  • Gain Perspective
  • Current Tax Law for Non-Profit NQDC Programs
  • Competitive Disadvantage
  • Corporate America Windfall vs. Challenged Non-Profits
    • Which Employees are Covered Under the New Excise Tax?
    • What is “Excessive Compensation?”
    • What is an “Excess Parachute Payment?”
    • When Does the New Excise Tax Apply, and are There Grandfathering Rules?
  • Split Dollar Life Insurance as an Executive Benefit: The Basic Concept
  • Graphic Illustration of Concept
  • Loan Regime Split Dollar: Mechanics and Contract Rights
  • Loan Regime Split Dollar: Economics and Taxation
  • Tax Law Applicable to Split-Dollar Arrangements
    • Loan Regime/Collateral Assignment Split Dollar
  • A Split Dollar Arrangement for a Key Employee: A High-Profile Example
  • Comparison of 457(f) Plans to Split Dollar Life Insurance
  • Takeaway Message
  • Recommended Next Steps

If you’re interested in learning more on this topic, take a look at A Practical Guide To Accounting For Loan Regime Split Dollar Arrangements.  Written by EBS Managing Director Chris Rich (a former E&Y Tax Partner), it provides an overview of the accounting for split dollar arrangements. 

Furthermore, we’ve put together a video on the use of a split dollar plan at nonprofit organizations.  You can watch the video and download our case study, and as always, feel free to reach out with any questions or comments.  617.904.9444 or info@executivebenefitsolutions.com

Suddenly, everyone in non-profits wants to know more about split-dollar life insurance.
Find out why. Download Our Latest White Paper.