Would you like to learn more?Request a Call |
Part of sound business practice is to assure that your key people are compensated in a way that rewards their past performance and encourages future performance. There are several tools available to help you provide targeted benefits to you and your key people. It is not unusual for a business to use more than one of these concepts – building a program that helps meet your unique needs.
Non-qualified plans are plans that you can use to provide additional benefits to yourself and your key employees and executives. A non-qualified plan is often used along with a qualified plan as an additional benefit to attract and retain key employees. They also offer greater flexibility in who can be covered under the program and are generally easy to establish and administer.
Visit our Frequently Asked Questions.
If you are like many business owners, much of the success of your business depends on your employees. Often times, there is a core group of contributors who help drive your business. Whether they are part owners or important employees, they bring value to the table. You want to make sure that your business will continue to be successful even if you lose their expertise.
So how do you protect your business when the financial security of your business is threatened by the death of a key person?
You can help cover the financial loss your business would experience at the death of a key employee by insuring your key people.
Key person insurance can be used to:
While you can never replace your key people, you can help protect your business from experiencing financial loss at their death.
An Executive Bonus Plan, also referred to as a Section 162 plan, allows a business to provide personally owned life insurance as a tax-deductible fringe benefit to select key employees.
If the benefit is for a non-owner employee, an executive bonus plan is appropriate for all business forms, including professional corporations, partnerships and LLC’s. However, this type of plan does not offer any tax benefit for business owners if the business is an S-Corp, partnership or LLC taxed as a partnership.
The advantages of an Executive Bonus Plan:
A Split dollar plan offers a creative solution to helping your key employee obtain needed life insurance.
Split dollar is a term that covers two different executive benefit arrangements.
The Advantages of a Split Dollar Plan:
Your business may enter into an arrangement with your highly compensated or select group of management and provide them with a supplemental retirement arrangement that is tailored to both the business and executive’s needs.
This arrangement is appropriate where the business entity will continue to operate for a long period, at least long enough to pay the benefits promised under the arrangement. Essentially, the business promises to pay a benefit to the executive at some time in the future (often at retirement age).
The Advantages of a Non-Qualified Salary Continuation Arrangement: