ALEXNDRIA, Va. – NCUA recently gave the go-ahead to a federally-chartered credit union wanting to use split dollar life insurance to fund employee benefit obligations. The FCU said the split dollar arrangement is owned by the employee and paid for by the FCU. The FCU treats the split dollar arrangement as a nominal loan to the employee to conform to Internal Revenue Service regulations to obtain favorable tax treatment, it added. The credit union also indicated the split dollar arrangement complies with 701.19 of NCUA's regulations regarding benefits for employees of FCUs and the Office of General Counsel opinion letters 03-0512 and 04-0453, dated February 27, 2004 and November 24, 2004, respectively, regarding funding employee benefits with life insurance; and general safety and soundness considerations. NCUA Associate General Counsel Sheila Albin wrote "based on your description of the arrangement, we have no legal objection."
Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.
Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
- Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
Already have an account? Sign In Now
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
