Economic benefit information
The tools below are provided to assist clients and advisors to calculate Split-Dollar Economic Benefit Reporting.
Due to specific changes in the applicability of rates to certain types of split-dollar arrangements (with which Lincoln is not party to and has no direct knowledge of), and rules that can currently tax certain cash values, Lincoln will only be providing certain policy information to the policy owner. This will include potentially applicable Government term rates.
The policy owner's tax advisor will have to decide which pieces of information are appropriate to which agreement and which calculations to use. Lincoln will not be able to provide a definitive answer as to the exact calculation that should be used. To assist clients in complying with these regulations, Lincoln has developed a worksheet that the client will be able to use with his or her tax advisor.
This page includes a downloadable copy of the worksheet, IRS and company rate charts and Frequently Asked Questions.
Preview of cover letter and worksheet clients will receive when a request is made for a single life policy.
Single Life Worksheet (PDF)
Preview of cover letter and worksheet clients will receive when a request is made for a joint life policy.
Joint Life Worksheet (PDF)
IRS rate charts
Company rate chart reporting
Frequently asked questions
In a split-dollar policy, an employer pays the full premium for the policy and the employer reports the value of the life insurance protection as income to the employee. This income to the employee, or economic benefit, is measured using a number of factors. This economic benefit amount is the value of the life insurance protection.
Lincoln doesn’t calculate the economic benefit of your split-dollar policy. At your request, Lincoln will provide you with certain information about your policy and you will be responsible for calculating and reporting the economic benefit of your policy. If you have more than one policy, you may notice a difference in the format of the communication, but it will be your responsibility to calculate the economic benefit using the information provided. Lincoln cannot assist you in your calculation. Any questions you have about calculating the economic benefit should be directed to your tax advisor.
The measure of the economic benefit amount for your policy requires legal interpretation of laws and facts specific to your policy. Lincoln and its representatives aren’t authorized to calculate or assist you to calculate this measure. Further, Lincoln isn’t required to provide the economic benefit amount to its policyholders. However, Lincoln will provide all information you request to help you with calculating the economic benefit amount of your policy.
If your policy is identified as a split-dollar arrangement, Lincoln will send you a cover letter with important information about your policy, and a worksheet with the factors and amounts necessary to assist you with calculating the economic benefit. Additional information and the worksheet are also available online at www.Lincoln Financial.com. Please note that the worksheet is only a guide and you should consult your own tax advisor for any questions about this calculation.
Lincoln will use values as of December 31 and mail the information to you in mid-to-late January each policy year.
Lincoln provides you with the information necessary to calculate the economic benefit amount of your policy. The economic benefit amount of your policy will depend on the type of split-dollar arrangement, the date the arrangement was entered into or the date it was materially modified, the type of life insurance policy used (single-life or joint-life) and the rate table used.
There are two types of split-dollar arrangements – economic benefit regime and loan regime. The economic benefit regime applies to company-owned, endorsement split-dollar policies as well as non-equity, third-party owned (e.g. irrevocable trust) collateral assignment arrangements. The loan regime applies to other collateral assignment plans. Additional information can be found in IRS Notice 2002-8. Consult your tax advisor to help you determine the type of arrangement that applies to your policy.
You or your tax advisor will need to determine if your policy has been materially modified. Lincoln cannot assist you in this determination. Examples of changes that don’t materially modify your plan may include: change of premium mode, change in the beneficiary, change in loan interest rate, change of address, or any change required to maintain the contract as life insurance under section 7702. These are just examples and you shouldn’t rely upon them to determine whether your policy has been materially modified.
For arrangements entered into before January 28, 2002 and are not “materially modified,” single-life plans can select between the issuing company term rates or the government Table 2001 rates and joint-life plans can use the Blended Rate per Notice 2001-10 (Revised Table 38). For arrangements entered into on or after January 28, 2002 or are “materially modified,” single-life plans can select between the issuing company term rates or the government Table 2001 rates; and joint-life plans can use the Blended Rate per Notice 2001-10 (Revised Table 38).
Lincoln cannot assist you in determining the table to use to calculate the economic benefit of your split-dollar policy. Please consult your tax advisor.
Yes. Lincoln developed one-year term rates for use in valuing the economic benefit of its one-year, non-renewable, non-convertible term contract. You may use the Lincoln LifeElements® One-Year Term rates to calculate your economic benefit. Note that Lincoln designed the Lincoln LifeElements® One-Year Term rates to comply with the guidance contained in Notice 2001-10. However, Lincoln cannot guarantee that the rates satisfy all of the IRS requirements for an alternate term rate. If you’re considering using Lincoln LifeElements® One-Year Term rates, you should consult and rely upon your own legal or tax adviser before using these rates. Please note that the company one-year term rates are not available to our Aetna/VOYA or Connecticut General customers that we service through an administrative agreement.