Since the Tax Cuts & Jobs Act locked in a flat 21% corporate tax rate for C-Corps — down from rates as high as 35% — split dollar plans have re-emerged as one of the most compelling tools available for business owners and high-income earners. The lower rate makes premium funding inside the business dramatically more efficient, and clients who haven't revisited this strategy are likely leaving significant value on the table.
21% - C-Corp flat tax rate
35% - Previous top rate
No IRS approval needed
You don't need a long checklist. If your client checks both of these boxes, they're worth a conversation about split dollar:
One often-overlooked advantage: split dollar plans are flexible by design. You can set different benefit levels for different participants — and the owner doesn't have to include key employees if the goal is solely personal.
The life insurance component isn't incidental — it's what makes the strategy work. Here's why it matters in each phase of the plan:
Unlike qualified plans, there are no IRS contribution caps and no government-mandated participation requirements. You choose who's in and how much goes in.
The premium cost basis is treated as a business asset. The company retains control over when and how funds move on or off the balance sheet — a meaningful consideration for owners thinking about future transactions or financing.
Contribution, accumulation, and distribution can all be structured to minimize personal out-of-pocket and tax cost — a rare combination in executive benefit planning.
Cash value accumulation inside the policy can ultimately support tax-free income distributions — reducing reliance on any single income source in retirement.
Not all cash value life insurance is created equal. For split dollar plans, indexed universal life insurance (IUL) is the preferred engine — and for good reason. Unlike qualified retirement accounts, IUL offers:
Income-tax-deferred growth
No IRS contribution limits
No 10% early-access penalty
No required minimum distributions
Creditor protection (most states)
Income-tax-free death benefit
That combination of flexibility, tax treatment, and protection features makes IUL uniquely well-suited to serve as the foundation of a split dollar arrangement — and gives your clients an advantage they simply can't replicate through traditional plan designs.
Split dollar is a high-impact strategy — but it's also one where execution matters. Structuring the arrangement correctly, selecting the right product, and coordinating with the client's CPA and legal team requires experience and specialized knowledge. That's where we come in.
At Advisors Resource, we work alongside financial advisors as a behind-the-scenes team player — helping you bring sophisticated strategies like split dollar to your business-owner clients without adding overhead to your practice.