IRS Finalizes Split-Dollar Regulations - Time for Action for Existing Arrangements

On September 11, 2003, the IRS issued final regulations governing the tax treatment of split-dollar life insurance arrangements. The final regulations largely reflect the proposed regulations that the IRS issued July 9, 2002 and again on May 9, 2003. Although the final regulations are not a significant departure from the proposed rules, the final rules do affirm the IRS's intention to significantly change the tax treatment of split-dollar life insurance arrangements from the treatment that employers and practitioners applied in prior years.