Comments Concerning IRS Notice 2001–10
I. Characterizing Equity SDAs
- Section 7872
- Payments by Employee under Existing Equity SDAs
We request guidance on how to treat payments by the employee towards the premium cost under an Equity SDA. Many Equity SDAs require the employee to pay for a portion of the policy premium. It is likely that these agreements will continue to require the employee to pay a portion of the premium (such as the P.S. 58 rate) unless the parties subsequently agree otherwise. If the employee does pay for a portion of the premium payment, will this amount be treated as a payment of loan interest if the employer has a right to receive back all of its premium payments? Will premiums paid with loan proceeds be treated as an investment in the contract for purposes of Section 72 of the Code?