Employee benefits can be good for you and your employees. Today, employees expect some form of benefits. Furthermore, benefits enhance employer-employee relationships. Insurance can help set up attractive benefits programs.
Employers may deduct premiums paid to provide group-term life insurance coverage to employees provided the employer is not the beneficiary.
Non-qualified Deferred Compensation (NQDC)
A nonqualified deferred compensation (NQDC) plan can give business owners a definitive edge when it comes to attracting and retaining key people. An NQDC plan can also provide retirement benefits on a selected basis, and more importantly, over and above the benefits provided in a traditional qualified retirement plan. It is ideal for highly compensated employees and for select individuals, and it can even provide more benefits than an increase in salary would.
- Qualified versus Nonqualified Plans [PDF]
- Nonqualified Plan Design Comparison [PDF]
- Informal Funding Comparison [PDF]
- Section 409A and the Impact on NQ Retirement Plans [PDF]
- Supplemental Executive Retirement Plan (SERP) Explanation Chart [PDF]
- Split SERP Plan Explanation Chart [PDF]
- True Deferral Plan Explanation Chart [PDF]
- 401(k) Look Alike Plan Explanation Chart [PDF]
- The Importance of an Experienced Third Party Administrator [PDF]
Key Person Insurance: Why key persons?
How many ways are your two or three most valued employees tied to your company? Is a fully taxed salary or cash bonus their only compensation?
A key person is the employee who is responsible for a large part of business profits. This person would be difficult to replace, and his or her loss would be far more damaging than any fire or theft. There may be lost revenue, lost management skills, lost marketing opportunities, or lost financing.
I can show you a Key Person Strategy involving life insurance that helps you reward your most valued employees with a valuable tax-advantage benefit. Key person insurance uses corporate dollars to pay a personal expense. It allows the employee to own and direct the policy investments and add personal money to the policy’s cash value and enjoy the benefit of tax-free transfers and tax-favored accumulations.
Meanwhile, your business gains: a flexible benefit that can be enhanced or terminated at any time, the ability to select who qualifies for the benefit, a company benefit with little or no IRS involvement, and a level predictable cost.