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Split Dollar

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Guest gdburns

Split Dollar is not an insurance plan. It is a method of paying for insurance policies.

The reason for using this method of funding an insurance policy sometimes needs no "plan". If no "plan"is needed then there usually is not enough continuing employer involvement nor enough administrative services needed from the employer to cause it to be ERISA governed.

For example using it to fund coverage on 1 or 2 key employees. There is nothing required from the employer on an ongoing basis and if the selection of carrier was done either by or mainly by the covered employees, there is probably nothing that would cause the arrangement to be either a "plan" or be ERISA.

I use the term "plan" to mean formal setting out of objectives with rules and conditions etc.

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There are very strange cases on this issue. In one case the court held that the death benefit was exempt from ERISA but the cash value portion was a top hat plan.

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  • 1 year later...
Guest Ry Benefits

I have administered split dollar programs for years. They are ERISA plans. However, they are typically either small welfare plans or top hat plans and as a result are exempt from all reporting and disclosure requirements. Typically, the only requirement is a SPD is made available upon request by the DOL.

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