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Split Dollar Plan: A Flexible and Cost-Effective Strategy

  • VIDEOS
  • CASE STUDIES

A split dollar plan in combination with specially designed incentive plans can provide a highly competitive total rewards package.

The traditional programs offered are often ineffective at meeting the needs of participants and objectives of the organization.

Nonprofit organizations compete with for profit businesses to attract and retain talented executives and professionals.

However, they’re at a significant disadvantage.
  • Nonprofits are unable to offer any form of equity compensation
  • Tax restrictions limit plan designs and increase costs

We discuss the potential advantages of a split dollar plan for both participants and plan sponsors.  As we note in the video above:

Advantages for Participants:

  • Tax advantaged supplemental savings,
  • Freedom from the risk of forfeiture requirements of 457(f) programs,
  • Competitive investment options and,
  • Financial security

For Plan Sponsor:

  • The design flexibility to meet specific goals and objectives,
  • Potentially significant cost reduction, including relief from the 21% excise tax and,
  • Comparatively favorable Form 990 disclosure.

In addition to the video, we’ve put together a case study on the use of Split Dollar for a nonprofit entity – a group of Hospital Executives – that’s available for download.  The case study provides a practical example comparing the use of 457(f) to a split dollar plan.  The case study also lays out a number of key issues that should be considered when designing a supplemental retirement income plan for nonprofits.

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At EBS we consider ourselves experts when it comes to helping our clients implement split dollar plans – our oldest ongoing split dollar client dates back to 1992.  We have a number of helpful resources on the website related to split dollar.

 

Looking to dive right in?  Our highly detailed white paper, “Why Non-Profits Are So Interested in Split Dollar Life Insurance – Should You Be, Too?” provides an in depth look at how nonprofit organizations can level the playing field between nonprofits and for profits in their competition for top talent.

For those of you that are numbers people (calling all CFO’s), might we suggest another white paper?   In, “A Practical Guide To Accounting For Loan Regime Split Dollar Arrangements”, we discuss the accounting and disclosure issues as well as the most favorable plan design (in our expert opinion).

 

As always, we welcome all and any questions or conversations regarding split dollar life insurance programs.  You can ring us at 617.904.9444 (pro tip press ext. 2 for EBS Managing Director, Chris Rich, a former E&Y Tax Partner) to start the conversation on whether or not split dollar is the right choice for you. 

We look forward to hearing from you.

 

P.S Not a phone person?  Drop us a line via email:

Chris Rich: crich@ebs-boston.com

General: info@movingebs.wpengine.com

Or follow along our ongoing conversations via Twitter and LinkedIn:

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EBS National Twitter

Disclosure: A variety of life insurance products can be used for this split dollar concept, including variable life insurance, which is offered by prospectus. Securities offered through Lion Street Financial, LLC. (LSF), member FINRA & SIPC. LSF is not affiliated with EBS and neither LSF nor EBS provide legal or tax advice. Complex tax rules apply for split dollar arrangements. For complete details, consult with your tax advisor and attorney.