Alternatives to Capital Split Dollar (CSD)
Alternatives Table
Factors
Tax Impact On CompanyCost
Employee Tax Impact
Tax Offsets
Taxation on Benefits
Vesting
Accounting Impact
Risk to Employee (ee)
IRC 162 Bonus
Deductible
Fully Taxable
Double Bonus
Tax Free
Restricted Bonus
Expense to
Company
EE controls the plan
SERP
Taxable to
Company until Paid
to EE
None During
Employment
Taxable Benefits
None
Fully Taxed
Vested according to
Agreement
Benefit is Liability
on Balance Sheet
EE At Risk based on
Company
Performance
CSD
Deductible
Small Annual Cost
Taxed on Loan
(AFR)
Double Bonus
Tax Free
Like a Restricted
Bonus
Collateral as
Liability on Balance
Sheet
EE Controls the
Policy once the
loan is paid off