4027 / What are the income tax results of a split dollar plan entered into before September 18, 2003?

Split dollar arrangements that were entered into before September 18, 2003, are governed by various rulings and other guidance that were issued by the IRS between 1964 and the issuance of final regulations on split dollar arrangements in 2003. This guidance includes Notice 2002-8,¹ which provides transition rules for arrangements not subject to split dollar regulations. No inference is to be drawn, however, from Notice 2002-8 or the proposed or final regulations regarding the appropriate tax treatment of split dollar arrangements entered into before
September 18, 2003.

For the treatment of split dollar arrangements entered into after September 17, 2003, see Q 4023 and Q 4024.

Notice 2002-8

For split dollar arrangements entered into before September 18, 2003:

(1)  The IRS will not treat an employer as having made a transfer of a portion of the cash value of a life policy to an employee for purposes of Section 83 solely because the interest or other earnings credited to the cash value of the policy cause the cash value to exceed the portion payable to an employer;