Income Tax Implications in Split Dollar Life Insurance Plans

Survivorship Life (SL) policies provide a significant income tax advantage while both insureds are alive when an employer uses the policy in a split-dollar arrangement. In a basic endorsement split-dollar plan with a single life policy, the employee generally is taxed on the reportable economic benefit (REB) . If the employer uses a SL policy (typically naming the employee and his or her spouse as the insureds), the REB for the SL policy will be lower than that of a single life policy.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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