~ Business & Corporate Planning ~

Common concerns for business owners:

Key Employee Planning

Executive Bonus Plan – Sec. 162

  • Employer pays premium for key employee for life insurance.

  • Premiums are tax deductible to employer and taxable income to employee.

  • Employer can tailor plan.

  • Plan can be for owner or key employee. Great benefit addition.

Split Dollar Life Insurance

  • Arrangement under which two partners share premium, cash value and death benefits.

  • Plan can be between an employer and key employee.

  • Can fund Buy-Sell arrangement among multiple business owners.

  • Can also be used as planning tool between family members.

 Deferred Compensation Plan

  • Opportunity for business owners to lower taxable income for key employees  

      (including themselves) as supplement to retirement income.

  • Enables business to recover plan costs when benefits are paid.

  • Plans are non-qualified and can be offered to select employees, as few as one. 

      Business owner can participate as well.

 

Key Person Policy

 

  • Covers the loss of an employee due to death whose contribution is vital to the business.  Value can be assessed by responsibilities, intellectual Property or revenue produced by the employee. The policy can help offset the expense of replacing, training a new employee or help with the loss of revenue.   The policy is usually owned by the business and the death benefit is paid to the company.

 

Buy-Sell Agreements

 

  • Three types:  Entity Buy-Sell, Cross Purchase Buy-Sell and Partnership Administration Succession Strategy (PASS).

  • Written agreements that allow for the purchase of a business owner/partner’s interest in the event of disability, death, divorce or departure of a co-owner. The Arrangement used depends on one that is best for the business structure.

  • Insurance usually is the funding mechanism for the plans.

  • A Disability Buy-Sell can be implemented to cover the long term disability of owner when there are two or more owners.  Insurance is purchased specifically for that purpose.

 

Business Overhead Expense Coverage

  • Disability policy that covers many of the operational expenses of a small business when the owner becomes disabled.  Salaries, accounting fees, supplies and rent are a few of the items that can be covered.

Individual Disability Insurance

  • The salary of a business owner is not covered under a Business Overhead Policy.  It is vital the individual income of owners is protected like any other employee.  The premiums are not tax deductible but the benefits are tax-free!

Premium Financing for Business Owners**

Premium financing can be a valuable strategy to help qualified business owners take advantage of IRC tax codes, especially when planning for retirement.  Some benefits of this may include:

  • Preservation of income and capital

  • Control of cash flow and avoid liquidating assets

 

Premium Financing Benefits

  • Obtain a significant amount of coverage with limited up-front out of pocket cost.

  • Preserve, maintain and build assets in your existing investment portfolio without liquidating assets to pay life insurance premiums.

  • Utilize your annual gift tax exclusions or lifetime exemption to transfer other assets.

  • Minimize or eliminate gift taxes on policy premiums if the policy is owned by a trust.

  • Gain an economic advantage if the crediting rates under the life insurance are favorable compared to the loan borrowing rates from the lender.

  • Use the cash surrender value of your policy as loan collateral, so you only have to provide additional collateral for the difference between your loan amount and any balance not covered by the policy.

 

** The May Group also works with Stryde through May/Fleming Business Solutions to offer the Stryde Retirement Program.  Visit  www.mayfleming.com to contact us for more information

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Independence Office:

6100 Oak Tree Blvd. #200

Independence, Ohio 44131

Boardman Office: 

848 Mapleridge Dr. 

Boardman, Ohio 44512

330-718-3047

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