Split-Funded Plan Law and Legal Definition

Split-funded plan refers to a retirement plan that has the elements of both life insurance and investment plans. Generally, it is a retirement arrangement where funds are separated for the purpose of making contributions in both life insurance and in an uninsured investment plan. It is also a form of employee benefit plan. The contributions are invested usually in investments that employees choose from a list of options. The funds are mainly provided by employers and these contributions are not fully vested in an employee unless the employee has achieved certain duration of service with an employer. [Peachin v. Aetna Life Ins. Co., 1993 U.S. Dist. LEXIS 14388 (N.D. Ill. Oct. 12, 1993)].