NU Online News Service, July 24, 6:55 p.m. — Washington
Life insurance agents are urging Congress to be fair to split-dollar life insurance arrangements.
The National Association of Insurance and Financial Advisors, Falls Church, Va., and one of NAIFA’s conferences, the Association for Advanced Life Underwriting, have sent leading members of Congress a letter warning them that part of a pending corporate-governance bill might do unintended harm to split-dollar.
The letter refers to H.R. 3763, a bill that would, among other things, establish new executive compensation rules.
A House-Senate conference committee that is hammering out a consensus bill is considering a provision that would prohibit companies from making loans to their executives.
The AALU/NAIFA letter, which is signed by AALU President Albert Schiff and NAIFA President Robert Nelson, says the current version fails to give a clear description of what would constitute a “loan.”
Because the provision is so vague, enactment of H.R. 3763 could hurt split-dollar arrangements, AALU and NAIFA argue.
The letter notes that the Internal Revenue Service recently proposed regulations that treat premiums paid by an employer in connection with certain split-dollar arrangements as “deemed loans” for tax purposes. The IRS now taxes the arrangements as loans.