Sentences with phrase «split dollar plans»

In 2003, the IRS endeavored to restrict split dollar plans dramatically by creating an «economic benefit regime ``.

This is also the reason that the tax laws governing split dollar plans have undergone changes in recent years (2003) and remain under careful watch by lawyers and advanced market insurance practitioners.

This difference may be a factor if simply securing a death benefit for purposes such as life insurance for SBA loans OR otherwise planning to use policy cash value for business purposes such as executive bonus plans or split dollar plans.

However, you should at least be aware that split dollar plans are also used in other venues such as educational institutions (universities) or healthcare organizations, as a way to provide incentives for key personnel.

Because split dollar plans offer tax advantages, these plans are highly regulated by the IRS and are therefore more «involved» than simpler strategies such as executive bonus plans.

There are two types of split dollar plans — collateral assignment / loan regime and endorsement split dollar / economic benefit regime.

Complex tax rules apply to split dollar plans and should not be undertaken without an experienced tax advisor.

Because split dollar plans offer tax advantages, these plans are highly regulated by the IRS and are therefore more «involved» than simpler strategies such as executive bonus plans.

This is also the reason that the tax laws governing split dollar plans have undergone changes in recent years (2003) and remain under careful watch by lawyers and advanced market insurance practitioners.

Because other kinds of permanent life insurance (i.e. indexed universal life) are simply more speculative as connected to the financial markets with limited guarantees, they simply aren't as reliable (in our opinion) for executive bonus plans OR split dollar plans.

In 2003, the IRS endeavored to restrict split dollar plans dramatically by creating an «economic benefit regime ``.

However, you should at least be aware that split dollar plans are also used in other venues such as educational institutions (universities) or healthcare organizations, as a way to provide incentives for key personnel.

Other planning ideas for golden handcuffs AND risk management using cash value life insurance are featured in previous articles and include keyman insurance plans, executive bonus plans AND split dollar plans.

If an employee is interested in a large amount of personal life insurance but wants the business to buy the life insurance, a split dollar plan can be considered.

The key is if a business owner pays premiums on behalf of a key employee as part of an executive bonus plan, deferred compensation plan or split dollar plan, the premiums may be deductible if they are recognized as income to the employee.

A split dollar plan must address who will have access to the cash value that accrues in a permanent life insurance policy.

Funding a split dollar plan is a way to reward a key employee while accruing cash value in a whole life insurance policy that can serve as a ready source of funding for the employer.

It is very important to cover all aspects of your split dollar plan in detail, because a poorly conceived plan can be «unwound» under the IRS rules and this can lead to major tax consequences for the estates of either the employer or employee.

When determining who will have access to the cash value, it is important to identify the various goal of the split dollar plan and these are summarized in the questions of death benefit and control over the policy.

A split dollar plan is a business paid life insurance benefit that provides cost recovery for the business.

The split dollar plan is one of the incentive programs whereby the employer and the employee share the premium payments, or the employer pays the entire premium to buy insurance on the employee's life.

A split dollar plan must address who will have access to the cash value that accrues in a permanent life insurance policy.

A split dollar plan is structured by a contract which will ALLOCATE a number of aspects of the permanent life insurance to either the employer or employee.

How a split dollar plan is structured will depend upon the specific goals and concerns of the business owner AS WELL AS the specific situation of the key employee.

To achieve the above benefits, a split dollar plan provides a way of paying for AND owning permanent life insurance by ALLOCATING the cost of premiums AND the benefits of the policy between the employer AND the employee.

It is very important to cover all aspects of your split dollar plan in detail, because a poorly conceived plan can be «unwound» under the IRS rules and this can lead to major tax consequences for the estates of either the employer or employee.

A split dollar plan is NOT about a specific life insurance product but rather is a contractual strategy for using life insurance.

Funding a split dollar plan is a way to reward a key employee while accruing cash value in a whole life insurance policy that can serve as a ready source of funding for the employer.

When creating a split dollar plan for a closely held business, the first important question is how to classify an individual who is involved in ownership of the business AND who is benefiting from the policy.

When determining who will have access to the cash value, it is important to identify the various goal of the split dollar plan and these are summarized in the questions of death benefit and control over the policy.

Under a split dollar plan, employees can often choose from a few different types of life insurance coverage.

Not exact matches

Two asset protection benefits are, one, that an irrevocable trust may be set up for the employee to own the policy, such as an irrevocable life insurance trust OR another type of grantor trust, and this can assure that the policy will not be included in the employee's taxable estate for split dollar estate planning purposes.

If you would like more information regarding how split dollar life insurance fits into your small business planning, please give us a call today.

We craft deferred compensation agreements and plans, supplemental executive retirement programs (SERPS), current and deferred bonus plans, split dollar agreements, and change of control and severance agreements.

Split - Dollar Plan Generally used in business situations, a life insurance arrangement whereby the ownership and benefits of a policy as well as the obligation to pay premiums are divided or split between an employer and employee.

The IRS recently has announced changes in the taxation of split - dollar plans, and these changes cast doubt on the future utility of some of these arrangements and create a risk of potentially disastrous tax consequences for participants in certain existing split - dollar arrangements.

An insured person may enter into an arrangement with family members or a trust for the family's benefit, but most split - dollar plans involve a fringe benefit program in which an employer assists an employee in purchasing an insurance policy on the life of the employee for the benefit of the employee's family.

These employment - related split - dollar arrangements were sometimes used as a method of deferred compensation and sometimes as an estate - planning technique for the insured employee.

These benefits include loans, withdrawals, collateral assignments, split dollar agreements, pension funding, and tax planning.

Tax rules for employer - owned life insurance policies, such as split - dollar and reverse split - dollar plans, are more complex.

For all of the reasons discussed in our recent post about executive bonus plans, we tend to prefer traditional whole life policies, a / k / a cash value policies, when designing any long term split dollar life insurance executive compensation plan.

Two asset protection benefits are, one, that an irrevocable trust may be set up for the employee to own the policy, such as an irrevocable life insurance trust OR another type of grantor trust, and this can assure that the policy will not be included in the employee's taxable estate for split dollar estate planning purposes.

Like many non-qualified plans, split dollar arrangements can be a very useful tool for employers looking to provide additional benefits to key employees (See also: How Non Qualified Deferred Compensation Plans Wplans, split dollar arrangements can be a very useful tool for employers looking to provide additional benefits to key employees (See also: How Non Qualified Deferred Compensation Plans WPlans Work.)

Limitations also exist on the usefulness of split - dollar plans depending on the how the business is structured (for example as an S Corporation, C Corporation, etc.) and whether plan participants are also owners of the business.

In 2003, the IRS published a series of new regulations that govern all split - dollar plans.

Understand how a private split - dollar life insurance plan can help leverage gifts and reduce estate taxes.

Since split - dollar plans are not subject to any ERISA rules, there is quite a bit of latitude in how an agreement can be written.