Thomas L. Deleot CLU ChFC

CONNECT

Address:

1018 Brookstown Ave
Winston Salem, NC 27101

Phone:

336-723-0014 ,Cell: 336-403-7904

Fax/Other:

336-724-3881

Split Dollar for Tax Exempt Organizations

 

 

Split Dollar for the Tax Exempt Organization

 

Split Dollar is a very attractive way to provide tax-free retirement income to highly compensated executives/professionals of Tax Exempt Organizations (there are several variations). The executive/professional can reduce his/her income via renegotiating their contract. The Tax Exempt Organization saves the 21% exceise tax (to the extent income over $1,000,000 is reduced) as well as payroll expenses which can average 5%. The Tax Exempt loans the compensation reduction plus 3:1 matching dollars to a trust for the benefit of the executive/professional and his/her beneficiaries. The trust buys a highly efficient life insurance policy on the life of the executive/professional who can receive tax free retirement income.  The loans plus accrued interest is repaid at death.

The Tax Exempt has turned an expense into an asset which grows at a competitive rate over time. The savings on excise tax and payroll expenses can be used to fund community outreach programs. This is a win/win for the Tax Exempt.