REB Cost in a Policy

The Final Split-Dollar Regulations state that the non-owner does not receive any investment in the contract, or basis, for the payment of the reportable economic benefit into the policy. So for split-dollar arrangements that are subject to the final regulations, there is no basis for the REB cost regardless of whether it is paid or the insured is taxed on this amount. For split-dollar arrangements that are not subject to the final regulations, however, the answer is unclear. Dicta in a recent Tax Court case suggests that the REB cost does create basis.

View more information about these kinds of policies with are article Types of Split-Dollar Plans.

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

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