IRS Changes Course On Split-Dollar Life Insurance And Offers Transitional Tax Planning Opportunities
January 2002
On January 3, 2002, the Treasury Department revoked last year's controversial guidance, Notice 2001-10, regarding the taxation of split-dollar life insurance arrangements. Notice 2002-8 replaces Notice 2001-10 with new interim guidance pending the issuance of proposed regulations.
The interim guidance provides important planning opportunities, including terminating existing split-dollar arrangements without income tax consequences and restructuring policy arrangements under more favorable tax rules than would have been allowed under Notice 2001-10. Pending arrangements may need to be finalized before January 28, 2002 to qualify for certain advantages provided under the Notice.
Click here if you would like to review a summary of this guidance and actions that employers may take under the interim guidance.
