Final Split Dollar Regs

[TCWalker]

The much anticipated final regs. are out, with a 09.17.03 effective date and maintaining the 12.31.03 sunset transition date.

Quoting the release: "The regulations provide tax rules that reflect the underlying economics of split-dollar life insurance arrangements,” stated Treasury Assistant Secretary for Tax Pam Olson. “Under these rules, companies cannot use split-dollar life insurance arrangements to provide tax-free compensation to their executives. By insuring that split-dollar arrangements are appropriately taxed, the regulations curb a backdoor form of executive compensation and promote greater transparency.”

Link:

http://www.ustreas.gov/press/releases/js726.htm

[Guest buxbaum2]

Is there one website that strictly focuses on Non Qualifed Comp plans? Thanks.

[TCWalker]

In addition to what we've discussed via e-mail, check-out the American Benefits Council site, under ISSUES, then Executive Compensation menu. There are some nice white papers, charts, legislative analysis etc. And, Clark Consulting maintains a web knowledge base you can access upon joining their mailing list. Good luck!

http://www.americanbenefitscouncil.org/

[gc@chimentowebb.com]

On 9/12/2003 at 2:04 PM, TCWalker said:

The much anticipated final regs. are out, with a 09.17.03 effective date and maintaining the 12.31.03 sunset transition date.

Quoting the release: "The regulations provide tax rules that reflect the underlying economics of split-dollar life insurance arrangements,” stated Treasury Assistant Secretary for Tax Pam Olson. “Under these rules, companies cannot use split-dollar life insurance arrangements to provide tax-free compensation to their executives. By insuring that split-dollar arrangements are appropriately taxed, the regulations curb a backdoor form of executive compensation and promote greater transparency.”

Link:

http://www.ustreas.gov/press/releases/js726.htm

I happened to see this and 22 years later I would disagree a bit with Ms. Olson for a particular type of plan: a collateral assignment split dollar plan grandfathered under § 1.61-22(j) from the 2003 final split dollar regulations.  Notice 2007-34 states specifcially that for this type of "grandfathered" plan, even though some premiums were paid after 12/31/2004, that the Service will continue its policy of not taxing the employee on the cash value profit in his policy at termination of the plan. This simply recognizes the policy of earlier Notice 2002-8. It's not written as clearly as you would like, but this type of grandfathered plan, even with premiums paid for years after 409A enactment, escapes tax on the equity build-up.