American Financial Systems

Some grandfathering will likely exist for agreements already in place prior to the publication of final regulations.

For split dollar arrangements entered into before January 28, 2002, PS-58 rates may continue to be used to determine the value of the life insurance protection.
For arrangements entered into before the date of final regulations, the executive would not be taxed under IRC Section 83, solely because the cash value of the policy has grown to exceed the corporation's share.
For arrangements entered into prior to the date of final regulations, the IRS would not treat an arrangement as having been terminated, and therefore no transfer of value will be implied, for as long as the executive continues to pay tax on the economic benefit received.

For Split Dollar Plans Using the Collateral Assignment / Equity Method:

For arrangements entered into before the date of final regulations, the parties may treat premium payments by the corporation as loans to the executive, whereby all payments by the sponsor from inception of the arrangement must be treated as loans for the first taxable year in which this method is followed. This allows corporations to essentially unwind the CASD arrangement and enter into a Premium Loan Arrangement by establishing a loan balance equal to cumulative premiums paid-to-date.
For arrangements entered into before January 28, 2002, the IRS will not assert a taxable transfer of property to the executive upon termination of the arrangement if

1.) the arrangement is terminated (including rollout) before
January 1, 2004, or

2.) all payments made by the corporation after
January 1, 2004 are treated as loans.

These options are described more fully in the pages below: