Split Dollar Plans
A Strategic Executive Benefit
How Split Dollar Plans Work
A Split Dollar Plan is a valuable executive compensation tool that allows businesses and employees to share the costs and benefits of a life insurance policy. This arrangement can help attract and retain top talent while providing tax-efficient financial security.
The employer and employee enter into an agreement to share the premiums, cash value, and death benefits of a life insurance policy. The structure of the plan depends on whether it is employer-owned or employee-owned, each offering distinct advantages.
Benefits of a Split Dollar Plan
✅ Executive Retention – Serves as a long-term incentive to keep key employees.
✅ Tax-Efficient Compensation – Provides financial benefits with potential tax advantages.
✅ Flexible Structuring – Customizable to align with company and employee goals.
✅ Cost Sharing – Reduces the financial burden on either party while maintaining strong benefits.
Considerations for Employers & Employees
Split Dollar Plans must be carefully structured to comply with IRS regulations and business goals. The type of arrangement, repayment terms, and ownership details should be reviewed to ensure long-term benefits.
