The use of a dollar splitting agreement may be a stand-alone benefit for the employee or be associated with an unqualified deferred compensation plan (NQDC). If the agreement is actually designed, it will benefit both the employee and the employer, but the tax code that defines the use of a dollar splitting plan is complex and revised. Organizations will want to consult with their tax advisors and other executive advisors before entering into such an agreement. The term “split-dollar” is quite self-explanatory. While some might be inclined to consider some of the provisions described above by the lens if they are from the university (the acceleration clause; Minimum interest rates rather than interest-free) or the bus (advancing all the money in advance) are too concentrated and lose sight of the motivation to conclude a 2000 deal on the dollar. The main objective of a 2000 insurance program is to effectively promote the long-term commitment of a key employee, which brings more benefits to the worker than the relative costs to the employer. This is not a zero-sum game – on the contrary, the program works best when the employee is able to make the most of the dollars allocated, in exchange for the explicit long-term commitment to be part of the employer team. The university and coach are together in this, and for the dollar split deal to achieve their goal, they all have to get what they`re looking for. New athletic director Warde Manuel said in March that the change to Harbaugh`s contract was nearing completion. The two sides formally agreed on June 3. When Harbaugh signed a seven-year contract with U-M in 2016, the university added the dollar policy of splitting as an additional incentive to pass it. The use of fractional dollar life insurance agreements as an alternative to deferred compensation is not a new approach.
Many people see it as a tactic that is only used by large organizations that try to keep senior managers. Indeed, it can be an effective strategy both for non-profit and for-profit organizations, S Corps, and as part of estate planning for family businesses. In the post-pandemic workplace, dollar splitting agreements can be particularly attractive to companies that are trying to stabilize their operations by securing key talent. Harbaugh`s agreement, as reported by Dan Murphy, ESPN (2016), and a freedom of information act request is as follows: “In addition to paying a $5 million salary for each of the remaining six years of its agreement, Michigan will borrow $4 million in 2016 from Harbaugh and an additional $2 million for the next five years to pay the life insurance premium.” Dollar-split life insurance contracts are not covered by the Employee Retirement Income Security Act (ERISA).