Principal John Gagnon discusses changes occurring in the Bank Owned Life Insurance market and shares which drivers he believes may be responsible for this increased activity, as well as how carriers are responding to BOLI momentum.
Because of the restrictive nature of the 457 rules and the addition of 21% excise tax under Section 4690, many tax-exempt organizations have looked to split-dollar life insurance as an alternative way of providing executive retirement benefits.
The more pervasive objection to BOLI is philosophical in nature and generally relates to the discomfort of receiving death benefit payments on the lives of current or former employees. This creates a misconception that the bank is profiting on the death of an executive.
Split Dollar arrangements offer an array of attractive planning opportunities for companies to provide meaningful benefits to key executives. In this video, Principal John Gagnon, answers the question “What is Split Dollar Insurance?” and discusses the components, process and reasons why companies choose to implement a Split Dollar arrangement.
How will BOLI react in a rising interest rate environment? At the start of 2021, banks faced several challenging economic conditions including declining net interest margins, lower asset yields, and excess liquidity.
NQDC plans can solve for shortfalls in savings for highly compensated employees and provide retirement preparedness equity to those who have already maxed out their qualified plans limits. They do this by helping these individuals save beyond the limitations imposed by the IRS on qualified plans.
Offering retirement benefit plans using life insurance has long been an important element of an employer’s ability to attract, retain, and reward their key management employees. While the 457(f) Retirement Plan and Collateral Assignment Split-Dollar (CASD) Plan both have the potential to provide meaningful benefits to employees, important tax, financial, and operational differences exist. The following tables will compare the plans and their impact from a participant and company perspective.
“We reject a lax view of fiduciary obligations and insist upon their scrupulous observance. But to say that a man is a fiduciary only begins [the] analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And, what are the consequences of his deviation from duty?” – Hon F. Frankfurter, SEC vs. Chenery (1943).