Loan Regime Split Dollar

The parties to the loan split-dollar arrangement should seek their own independent legal and tax advice as to whether and how to enter into a loan split-dollar arrangement based on the employer’s and employee’s unique circumstances.

Under a loan split-dollar agreement, the employee enters into an agreement with the employer. Midland National Life Insurance Company is not a party to this agreement and Midland National’s only obligation is to administer the policy it issues (consistent with the policy’s terms and conditions).

Under a split dollar agreement classified as a welfare benefit plan, the employee must belong to a select group of management, which includes quantitative and qualitative elements. To meet the quantitative standard, plans should be limited to the top 15% of the workforce. To meet the qualitative test, a significant disparity should exist between the average compensation of the top-hat group and the average compensation of all other employees.

Sammons Financial® is the marketing name for Sammons® Financial Group, Inc.’s member companies, including Midland National® Life Insurance Company. Annuities and life insurance are issued by, and product guarantees are solely the responsibility of, Midland National Life Insurance Company.