In Notice 2008-42, the IRS has provided guidance on new Code section 101(j), which was added by section 863(a) of the Pension Protection Act, and on Code section 264(f), which was added by the Taxpayer Relief Act of 1997. Notice 2008-42 provides that a modification of a split-dollar life insurance arrangement that does not entail any change to the life insurance contract underlying the arrangement will not be treated as a material change in the life insurance contract for purposes of Code sections 101(j) and 264(f).
For the uninitiated, split dollar life insurance arrangements is defined by the IRS as “an arrangement between two or more parties to allocate the policy benefits and, in some cases, the costs of a life insurance contract.”
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