1. The benefits to be paid under the plan, the rights of each party under the agreement and the conditions under which each party can exercise those rights. The corresponding rights of the employer and executives are stipulated in an agreement, of which: 1. The executive being exempt from purchasing expensive life insurance to duplicate the benefits of the plan, an employer who uses this plan makes available to management the equivalent of a tax-free salary increase. 5. In the event of abandonment of the policy, any gain from the policy that goes beyond the cost base is taxable to the employer. (Taxes can be avoided by political credit instead of abandoning politics) 2. The plan helps create an employment-friendly environment for the executive and thus reduces replacement and recycling costs. The plan also attracts new leaders. 2.
Termination of the parties` plan and rights in this case. 2. Benefits help provide security for both the executive and his or her family. 2. The cash values of life insurance will be generated on a tax-efficient basis. 1. The employer cannot deduct any of its premium costs for life insurance. 3. Financing is predictable and identifiable and the use of life insurance as an informal financial instrument ensures that assets are available if necessary. 2. These benefits are taxable as a normal income for survivors. 1.
Premiums paid by the employer are not taxable income for management. 4. Due to the police`s cash values and death benefits, the plan results in little or no cost to the employer and, in many cases, a benefit. (3) If the executive dies, the current value of survival benefits may be included in the executive`s estate. Unlimited marriage withdrawal will compensate for this inclusion if these benefits are payable to the spouse of the executive. If the executive dies more than three years after an irrevocable title of beneficiary, the death allowance should not be included in the executive`s estate. The employer claims and holds life insurance on the life of the executive, the nominal amount of which is sufficient to finance the death benefits of the plan. 7. No IRS authorization is required; ERISA compliance is nominal.
An alternative to the pursuit of death money can be funded by Split Dollar Endorsement. This technique allows death benefits from life insurance to be paid directly to the executive family on an income tax-free basis. With this plan, the employer holds the total present value of each policy and retains an interest in the death allowance of each policy, but only to the extent that the cash values or cumulative premiums it has paid are higher. 1. Important survival benefits are made available free of charge to the executive. 5. The employer is free to choose the frameworks to be included in the plan and the exact amount of benefits. 3. If the executive dies, the employer uses income tax-exempt death benefits to fund its deductible reversion income paid to the executive family. 6. The current value of the policy is an employer`s asset and can be borrowed or withdrawn in the event of an emergency or temporary working capital, without advertising or destruction of the purpose of the plan. 4.
The policy provides for a waiver of the premium and, in the event of an obstruction of the executive (as defined in the directive), the premiums earned by the employer are exempt from income tax. With this plan, an employer enters into a contractual agreement with an executive who promises that if the executive dies before normal retirement while still employed in the company, the employer will pay a certain amount of income to the management family for a certain term of employment.