Loan-Based Split Dollar
Employer offsets executive’s loan interest with a gross-up bonus.
Note: The Loan-Based Split Dollar module can reflect policy loans and/or withdrawals (for example, for retirement income for the executive). LB-SD Presentation #1 does not illustrate such policy activity; however, LB-SD Presentations #2, #3, and #4 do.
Employer offsets executive’s loan interest with a gross-up bonus;
In retirement years, policy loans used for loan interest to employer;
Additional policy loans for retirement income.
Employer offsets executive’s loan interest with a gross-up bonus;
Policy loan repays employer at retirement;
Additional policy loans for retirement income.
Employer offsets executive’s loan interest with a gross-up bonus;
Executive repays loan over 5 years beginning in year 16;
Employer bonuses the funds for the repayment;
Policy loan offsets the executive’s income tax on the bonus;
Additional policy loans for retirement income.
Loan-Based Private Split Dollar
Parent loans funds for annual premiums to the trust;
Trust pays loan interest to the parent using gifts from the parent.
Parent loans a single sum to the trust;
Trust pays annual premiums from the single sum;
Trust pays loan interest to the parent using gifts from the parent.
