Business Planning Group can help you create a strategy to build wealth, mitigate current tax liabilities, protect your lifetime earnings potential and provide tax-free income when you retire. We offer a full range of benefit and retirement products and professional expertise to help you plan now for your lifetime earning protection and eventual retirement. Now is the time to start seriously planning for for your life after work.
Qualified plans provide essential retirement benefits for employers and employees and can also provide death and disability benefits. Qualified plans can give employers a critical edge in attracting and retaining highly qualified employees.
Qualified plans must satisfy the Internal Revenue Code in both form and operation. This means that the provisions in your plan document must satisfy the requirements of the IRS code and those plan provisions must be followed. Plans that meet certain Internal Revenue Code requirements are “qualified” for special tax advantages, including income tax deductibility of contributions. Qualifying contributions are also not immediately taxable to employees (except for Roth
IRA and Roth 401k Plans). Funds within plans accumulate on a tax-deferred basis. These plans help employers and employees leverage their retirement savings.
Business Planning Group will assist you and your company in the establishment and management of your qualified plan.
- Defined Contribution plans
- Defined Benefit plans
- IRA plans
- 401(k) plans
Leveraged Premium Plans
Leveraged premium plans enable clients with a life insurance need to leverage liquid assets to fund a life insurance policy. With a leveraged premium plan, the client (or the clients’ trust or corporation) takes out a loan from a lender in order to pay the premiums on a life insurance policy. Here are a few benefits of leveraged premium plans:
- Leveraged premium plans reduce liquidity needs. This is helpful if your assets are not readily convertible to cash or, are committed to other expenses.
- Your current assets may be employed into investments with returns that are higher than the cost of borrowing.
- Premium Financing dollars can be used to leverage:
- Retirement income planning
- Prefunding of a corporate buyout
- Philanthropic planning
- Estate liquidity
- Estate maximization
- Corporate liquidation value replacement
- Corporate benefit planning
- Estate tax replacement
Typically, the insured will utilize a leveraged premium plan from a lending institution in order to leverage available dollars to purchase a policy on the life of the insured. With a leveraged premium plan, the lender pays the annual premium(s) on the life insurance policy and the policy owner (or a trust) will only have to pay annual interest on the financed premium.
Because the insured owns the policy, the insured will be responsible for the payment of the borrowed amount and interest until the loan principal is repaid to the lender, usually through a policy cash value withdrawal. The insurance policy cash values and other assets are used for collateral against the loan until it is retired.
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Executive Benefit Plans
As a successful executive, you’ve probably spent years building your team. In today’s ultra competitive market, losing a key team member could be devastating to your plans. Your top performers look to you to understand and recognize their value to the organization. Rewarding your joint successes with a lucrative executive benefit is your way of saying, ”you’re on my team!” Your executive benefit plans will be an arrangement between and key employees and your company, one where the company agrees to pay the key employee a specified benefit at a time, often at retirement.
Most non-qualified executive benefit plans help companies and business owners reward key employees without concern for employee retirement income security act (ERISA) discrimination compliance. In fact, many of these non-qualified benefit plans are unfunded and unsecured and fall outside of the ERISA guidelines. While most qualified plans have contribution limitations that make it difficult to ensure an adequate retirement income, non-qualified, “executive benefit” plans can remedy this condition for owners, executives, and your most valued employees; and are generally exempt from discriminatory and top-heavy testing to which qualified plans are subject.
Business Planning Group looks forward to being your partner in developing an executive benefit plan that meets the needs of the group of key employees that you need for success.
Here’s a list of executive benefit plan types that may work in your organization:
- Deferred compensation plans / SERP
- Key person insurance
- Leveraged bonus plans
- Section 162 executive bonus plan
- Section 162 double bonus plan
- Split dollar plans
- Buy-sell purchase agreement plans
- Executive and owner leverage plans
Some non-qualified plan contributions may be currently tax deductible for the employer and can be partially or fully taxable to the employee. These plans often allow employees to defer taxes until retirement, when they can hopefully withdraw the funds at lower tax rate or even tax-free.
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Captive Insurance Companies
Over the last few decades, large corporations have enjoyed the many benefits of operating their own captive insurance companies. Many of these “captives” are created to provide insured coverage where insurance was previously unavailable or priced to high. While risk management benefits of captives was important, the tax advantages derived form captives is also significant.
A captive insurance company is one that insures the enterprise risks of its’ parent company(ies). Captives are essentially a form of self-insurance where the insurer (the captive) is owned wholly by the business owner(s) or others. Covered under IRS code 831(b) since 1986, and known as “Micro-captives”, captives are typically established to meet risk management needs and are formed to cover a wide range of enterprise risks, especially those risks not easily insured by commercial carriers.
Micro-captive plans receive annual premiums by insuring the enterprise risks. Once the captive is established it is subject to state regulatory requirements including reporting, capital and reserve requirements. A well structured, IRS compliant and properly managed captive can provide you and your organization with many benefits.
Estate planning is organization of your affairs in order to effectively deal with the prospects of lost capacity and death. Estate plans will typically include a few documents. Some of the key documents in most plans:
- Health care power of attorney – will provide direction and legal approval for whomever will make decisions for you with doctors or other healthcare providers should you be unable to represent yourself. This is managed through a health care power of attorney.
- Living Will (or healthcare directive) – provides instructions for medical staff, in the event that you go on life support or require life-saving efforts to stay alive.
- Revocable living trusts – are drafted in addition to wills for more complicated estate-planning requirements. In these trusts, assets can be protected from taxes and probate. Instead of going through probate court, a trustee is appointed to manage the trust and makes decisions about trust assets. Trusts not only avoid probate but also the expense of requiring a probate attorney, paying court costs and having assets appraised.
- Financial power of attorney – appoints someone of your
choosing to handle your financial affairs.
- Will – your Last Will and Testament, “will” is a simple but
detailed list of instructions as to how and to whom you
wish to leave your property after you die.
In addition to these basic estate planning tools, plans often require making special provisions for the ongoing management of estate assets for:
- Financial support of children with special needs.
- Distribution options to heirs.
- Estate asset equalization.
Business Planning Group looks forward to working together to meet your estate planning expectations.
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When you think about all the things you have done in your life, the impact you have had on people and organizations, you are thinking about your legacy. How will those you love as well as the organizations you care about remember you for your
lifetime of commitment? If you have reached that place in your life where you are
able to understand and appreciate the fragility of the human form, then you may be ready to consider options for creating a lasting significance for your life, one that will create an enduring legacy for you or your family.
Legacy planning is different from estate planning, which focuses on financial and tax efficiency. Legacy planning, instead, focuses on how to leave a lasting impression of your values into the future.
Is legacy planning for you? For some people, working hard and retiring well is simply not enough. If you have lived a life that can be defined by your personal values, then you may want to continue to support your cherished values with actions and financial support after you are no longer here. Legacy planning is not just charitable giving. When a legacy plan is well constructed, you define and control the assets and distribution of the assets after you are gone. Your legacy plan will make your money really matter by creating assets that will continue to support your values into the future, even in perpetuity.
Business Planning Group looks forward to supporting your legacy planning needs. We’ll work with your tax advisors, attorney and charity(ies) of choice to assure that you have a legacy plan that creates the kind of lasting impression envisioned by you and your family.
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Individual Disability Income
According to the Social Security Administration, nearly 1 in 4 Americans will become disabled before they retire. Most may think, “I’m careful and the chances of an accident are low,” however, accidents don’t cause most disabilities. Instead, most disabilities are caused by back injuries, cancer, heart disease and many other illnesses. That is why an individual disability insurance should be a part of an effective financial plan.
Your ability to earn an income is the foundation to the life you and your family have created. When you are disabled, there is plenty to consider without worrying about being paid. Now is the best time to discuss individual disability insurance with Business Planning Group.
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