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split dollar agreement equals an ERISA welfare plan, so SPD must be provided?


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If a split dollar arrangement is an ERISA welfare plan, does this mean that there must be a SPD? I do not recall having seen a split dollar arrangement that had a SPD or that incorporated the SPD requirements into the agreement itself, but I wanted to get folks thoughts on this. Put another way, is there an exemption to all or some of the SPD content requirements for a split dollar arrangement that constitutes an ERISA welfare plan?

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Assuming it's an ERISA welfare plan, the SPD reqirement applies, unless participation is limited solely to one or more members of a select group of management or highly compensated employees.

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  • 3 years later...
Guest Ry Benefits

Typically, split dollar plans will fall under a top hat or small welfare plan exception (under 100 employees). The last post mentioned the top hat exception. If it meets either definition, the plan will be exempt from all reporting and disclosure requirements. The only requirement is that a SPD is provided upon request by the DOL. It is not required that participants be provided with a SPD.

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  • 3 weeks later...

1) A split dollar arrangement is not a welfare plan. It is an asset purchase and a transfer of property for services, a form of direct compensation. Some forms of split dollar could be considered deferred compensation, but are excluded under 409A.

2) Top Hat plans are NOT welfare plans, but are deferred compensation plans.

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1) A split dollar arrangement is not a welfare plan. It is an asset purchase and a transfer of property for services, a form of direct compensation. Some forms of split dollar could be considered deferred compensation, but are excluded under 409A.

2) Top Hat plans are NOT welfare plans, but are deferred compensation plans.

VEBAguru - For split dollar as an ERISA welfare plan, you may want to take a look at ERISA 3(1) (death benefits constitute an ERISA welfare plan) and DOL Adv. Opinions 77-23 and 92-22A.

Also, 409A does NOT exempt all split dollar arrangements. See Notice 2007-34.

Last, you can have a top hat ERISA welfare plan, but there is no requirement to make a top hat filing with the DOL to gain the exemption.

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Agree with EGB:

1) A split-dollar life insurance program is usually an ERISA welfare plan. Williams v. Healthalliance Hospitals, Inc., 135 F. Supp. 2d 106 (D. Mass. 2001); First Capital Life Ins. Co. v. AAA Communications, 906 F. Supp. 1546 (N.D. Ga. 1995) (widow of former employee had no right to proceeds of policy owned by employer, even though change-of beneficiary designation form had not been properly transmitted to carrier).

Quote taken from this paper...

http://d2d.ali-aba.org/_files/thumbs/rtf/1...CH011_thumb.pdf

2) There are tophat welfare plans but they are exempt from almost all reporting and disclosure requirments:

29 CFR 2520.104-24

Therefore I think that if it qualifies as a tophat you only have to have an SPD if DOL wants one as RY Benefits noted. On the other hand, I think that the small welfare plan exception only gets you out of the 5500 it does not get you out of the SPD.

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Split dollar is not a life insurance program or plan. It is a method of paying premium whether for life insurance, Disability insurance or otherwise.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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Thanks for the good information. I was unaware of the 'top-hat" welfare benefit plan exception.

Perhaps for DOL purposes (that is, for labor law purposes), split dollar may be considered a welfare benefit plan. But to IRS (and for tax law purposes) split dollar arrangements are not addressed under the welfare benefit provisions and in the context of the IRC. The split dollar regs were not issued under Regs 1.162-10, nor under IRC sections 419, 419A, 264 or 79. They were issued under sections 61 and 83.

The paper by Susan Katz Hoffman was not about welfare benefit plans but about deferred compensation plans. The paragraph was "dicta", not relevant to the central thesis of her paper. It relies on a single district court case. Not really authoritative in light of the different focus between labor law (ERISA) and tax law.

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Guest EXB 1
Agree with EGB:

1) A split-dollar life insurance program is usually an ERISA welfare plan. Williams v. Healthalliance Hospitals, Inc., 135 F. Supp. 2d 106 (D. Mass. 2001); First Capital Life Ins. Co. v. AAA Communications, 906 F. Supp. 1546 (N.D. Ga. 1995) (widow of former employee had no right to proceeds of policy owned by employer, even though change-of beneficiary designation form had not been properly transmitted to carrier).

Quote taken from this paper...

http://d2d.ali-aba.org/_files/thumbs/rtf/1...CH011_thumb.pdf

2) There are tophat welfare plans but they are exempt from almost all reporting and disclosure requirments:

29 CFR 2520.104-24

Therefore I think that if it qualifies as a tophat you only have to have an SPD if DOL wants one as RY Benefits noted. On the other hand, I think that the small welfare plan exception only gets you out of the 5500 it does not get you out of the SPD.

KJohnson is correct. I misspoke. A small welfare plan is not exempt from the SPD requirement. From experience, most split dollar plans are typically only offered to select group of HCE and viewed as Top Plan plans.

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