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Having a formal buy-sell is important, but just as important is making sure the money is there to complete the buy-sell. There are a number of ways to fund a buy-sell agreement: Cash on hand Unfortunately, cash (surplus cash!) is not always available when its needed most and depending on your business, the amount may be substantial. Sinking fund Think of this as a savings account. With this method, money is set aside
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: Keep lines of credit open. Train another employee for the same specialized skills. Assure the completion of ongoing project initiatives. Provide access to policy cash value through loans and withdrawals, which your business can use to meet
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 LLCs. However, this type of plan does not offer any tax benefit for business owners if the business
Qualified Plans Additional Disclaimers
Purchasing Life Insurance Through Your Qualified Plan Planning for your retirement may also impact someone else in your life, such as a spouse or partner. Life insurance can help self-complete your retirement plan, helping to make sure that your goals for their retirement can be met. Buying life insurance inside your qualified plan may be an affordable, tax-efficient way of meeting both your business and personal insurance needs. The advantages
Life insurance loans are different than withdrawals When you take a life insurance loan, you borrow against the collateral in your policy, but the loan amount can continue to contribute to the accumulated value growth of your policy (for participating loans). When you withdraw money from your life insurance policy, the money is taken from the death benefit, if the policy allows it, or from the dividends/additions to the policy
Benefits of taking a loan against your insurance policy A life insurance loan provides access to the cash surrender value you have built up, income tax-free1. In addition, benefits of a life insurance loan include: Guaranteed approval if you have enough cash surrender value. You can use the borrowed money for any purpose, for example to buy a new car, remodel your home, or fund educational expenses. Competitive loan interest
What is a Market Value Adjustment (MVA)? MYGAs are sometimes available with a Market Value Adjustment (MVA). An MVA is an upward or downward adjustment that may be applied to amounts withdrawn during the rate guarantee period. A MYGA with an MVA likely offers a higher guaranteed interest rate. The MVA option may be a good choice if you think that youre unlikely to need early access to cash. If you leave the money in the annuity for the full
Next steps Find out what is best for you and your unique situation: Work with your agent or a financial/tax professional Looking to buy a MYGA or another annuity? Request a call from a National Life agent. 1Unlike Certificates of Deposit, annuities are not FDIC-insured. 2Buying an annuity with a tax-deferred retirement plan doesn't offer extra tax benefits. If considering an annuity within a retirement plan, base your
What are the tax advantages of a MYGA? Because earned interest isnt taxed until you make a withdrawal, a MYGA is said to grow your savings tax deferred. This is different than with a CD, where you have to pay taxes every year on earned interest. Note that buying an annuity within an IRA or other tax-deferred retirement plan doesnt give you any extra tax benefits. If you're thinking about purchasing an annuity as part of a