Split the Policy and Spare the DollarSplit the Policy and Spare the Dollar

Competitive executive compensation planning in non-profit organizations is challenging. State and federal laws as well as public policy often limit the opportunities to offer compensation packages similar to those commonly offered in for-profit companies. This often skews the talent stream in their favor. The use of split-dollar life insurance as an executive benefit has become popular to provide a bridge over the compensation gap. It’s been used as a valuable employee benefit since the 1940s. Then and now, it’s used to recruit, retain and reward key employees with a tax-arbitraged plan. The arbitrage is using the nonprofit’s untaxed dollars to provide tax-advantaged benefits to key executives. Depending on the plan design, it can provid...