Mutual Funds as vehicle for deferred comp plan

[MarZDoates]

This is not my area of expertise, so sorry if this sounds like a stupid question. Can Mutual Funds be used as a funding vehicle for non-qualified deferred compensation plans where the employer loans money to the executive? I see where it can be done using a split-dollar life insurance policy. Thanks for any and all input.

[Guest Harry O]

I'm not sure I follow . . . "where the employer loans money to the executive"?

[MarZDoates]

The employer loans the premiums to the employee (executive). Employee pays the premiums to the life insurance policy. Loan documents are drafted between the employer and employee with a reasonable rate of interest. Employer retains a collateral assignment in the employee's policy equal to the amount of premiums or loans made.

[Guest Harry O]

I understand split dollar. Are you saying the employer would lend the money to the employee and the employee would buy mutual funds and at the end of the loan period the employee would return the money the employer loaned without interest?

[MarZDoates]

The employee would pay interest on the loan.

[QDROphile]

So what is deferred?