Endorsement Split Dollar Plans Reward & retain key executives ©2014 Voya Services Company. All rights reserved. CN1126-6189-1215

EndorsementSplit Dollar PlansReward & retain key executives

©2014 Voya Services Company. All rights reserved. CN1126-6189-1215


Important disclosures

The Voya™ Life Companies and their agents and representatives do not give tax or legal advice. This information is general in nature and not comprehensive, the applicable laws change frequently and the strategies suggested may not be suitable for everyone. You should seek advice from your tax and legal advisors regarding your individual situation.

These materials are not intended to and cannot be used to avoid tax penalties and they were prepared to support the promotion or marketing of the matters addressed in this document. Each taxpayer should seek advice from an independent tax advisor.

Variable insurance products are subject to investment risk, are not guaranteed and will fluctuate in value. In addition, there is no guarantee that any variable investment option will meet its stated objective.


Important disclosures

Life insurance products are issued by ReliaStar Life Insurance Company (Minneapolis, MN), ReliaStar Life Insurance Company of New York (Woodbury, NY) and Security Life of Denver Insurance Company (Denver, CO). Variable universal life insurance products are distributed by Voya America Equities, Inc. Within the state of New York, only ReliaStar Life Insurance Company of New York is admitted and its products issued.All are members of the Voya™ family of companies.

Before investing, carefully consider your need for life insurance coverage and the charges and expenses of the variable universal life insurance policy. Also consider the investment objectives, risks, fees, and charges of each underlying variable investment option. This and other information is contained in the prospectuses for the variable universal life insurance policy and the underlying variable investment options. Obtain these prospectuses from your registered representative, by calling 877-253-5050, or from Voya.com and read them carefully before investing.

All guarantees are based on the financial strength and claims paying ability of the issuing insurance company, who is solely responsible for all obligations under its policies.


Introducing Endorsement Split Dollar Plans

Simple plan design



Simple plan design

Death benefit for executive’s beneficiaries



Simple plan design

Death benefit for executive’s beneficiaries

Cost recovery for employer


Endorsement Split Dollar Plans

Employer promises benefit to Executive’s survivors upon hisor her death

Employer purchases life insurance to fund promised benefit

Executive taxed annually on “economic benefit”

Death benefit is received by Executive’s beneficiariesincome tax-free** Proceeds from an insurance policy are generally income

tax free (e.g., absent a transfer for value), and if properly structured, may also be free from estate tax.



EmployerSplit Dollar Agreement

1

Executive



Employer Executive

2

Voya Life Companies

1Split Dollar Agreement

IRS

2


Employer

2

Voya Life Companies

3

1

3


Executive

IRS

2

Split Dollar Agreement



Advantages Cost recovery available

to employer¹

Can be structured to avoid some or all of ERISA reporting and disclosure requirements

Simple plan administration

Death benefit received by executive’s survivors incometax-free²

Disadvantages No supplemental retirement

income provided

No “Golden Handcuffing”

Employee is taxed annuallyon the economic benefit ofthe coverage

¹ Provided policy remains in force to key employee's death.

² Proceeds from an insurance policy are generally income tax free (e.g., absent a transfer for value), and if properly structured, may also be free from estate tax.


Endorsement Split Dollar Plans in action

Widget Corp. wants to reward and retain services of Dan Brown:

Wants simple plan design

Wants to provide death benefit

Wants arrangement that offers cost recovery for Employer



Assume:

Dan Brown is 45 and in excellent health (preferred non-smoker)

Mr. Brown plans to retire from Widget Corp. in 20 years at age 65

Widget Corp. wants to provide Mr. Brown with death benefitprotection for his family



Widget Corp. enters into split dollar agreement giving Dan Brown the right to designate the beneficiary of $500,000 of death benefits

Widget Corp. purchases a policy on Brown’s life and pays $9,653 per year in premiums for 20 years

Dan Brown will pay taxes each year on the economic benefit of $500,000 calculated in accordance with split dollar regulations

Upon Brown’s death, Widget Corp. recovers its premium payments

Any remaining death benefit is received by Mr. Brown's beneficiaries

Hypothetical case:


Using a generic UL policy, illustrated at 4.25% hypothetical current rate of return, male, age 45, preferred non-smoker:

The information above illustrates how a universal life insurance policy may be used in connection with this concept to potentially achieve the results shown. It is purely hypothetical, is for illustrative purposes only and does not represent any specific product. Individual results will vary based on your age, gender, health, individual policy fees & charges including the cost of insurance.


Hypothetical case:


What has been accomplished?

Income tax-free death benefit for Executive’s beneficiaries*

Employer able to use life insurance to recover some or all of thecosts of providing the benefit

* Proceeds from an insurance policy are generally income tax free (e.g., absent a transfer for value), and if properly structured, may also be free from estate tax.


Other considerations

Accumulated earnings tax. The IRS could argue that a split dollar arrangement for a substantial shareholder goes beyond the reasonable needs of the business and should therefore be subject to accumulated earnings tax calculations.

Sarbanes-Oxley. Public companies that execute plans with certain defined individuals (directors and executive officers) should consider whether the plan violates the Sarbanes-Oxley Act, which prohibits extensions of credit to such individuals.

Alternative minimum tax. A company with significant preference items should consider whether increases in policy cash values will be subject to the alternative minimum tax.


Thank you!

Documents

Endorsement Split Dollar Plans Reward & retain key executives ©2014 Voya Services Company. All rights reserved. CN1126-6189-1215