While staying within the context of your business’ overall corporate financial goals, our plans are designed to ensure that, no matter what uncertainty lies in front of your business, it will remain and prosper. BEJS focuses on three major areas regarding preservation of your company’s future.
Key Person Insurance
A business today may be in serious trouble if it loses one of its key employees. The loss of these employees could be from a variety of sources: accident, illness, death, or leaving to work with a competitor. Proper planning is a necessity in order to retain these key employees while, at the same time, staying true to corporate financial directives. BEJS can provide solutions that could fund the business during the period of time in which a suitable replacement is found; or it could provide liquidity for surviving partners to purchase a deceased partner’s portion of the business from his/her estate.
Qualified Retirement Plans
By utilizing a well-documented, fiduciary-friendly process, we help our small-to-mid-sized, privately held companies design, implement, and administer successful retirement savings programs. We provide a breadth of resources to help our clients effectively manage their fiduciary responsibilities and work to ensure that their plan participants are saving adequately and investing appropriately for a financially secure retirement.
Non-qualified Plan Funding
BEJS can also help a business retain key employees by designing, implementing, and administering cost efficient and effective executive benefit plans that supplement restrictive qualified retirement and group insurance plans.
A business owner, age 57, was faced with a dilemma in planning for his family as well as the future of his business. He had one daughter who was actively involved in the successful business and was the heir apparent. Neither his spouse nor his son was active in the business. Naturally, the owner wanted to treat all members of his family fairly in the event of his untimely demise.
BEJS worked with the owner and his advisors and purchased a life insurance policy in a trust with his wife and his son named as beneficiaries of the trust.
The owner was satisfied that his daughter would receive the business, and the insurance proceeds would be used as a supplement to treat all family members fairly.
401(k) Plan Review
A plan sponsor reached out to BEJS to conduct an extensive exercise evaluating appropriate recordkeepers and/or potential Third-Party Administrators (TPAs). After a detailed analysis of the existing plan and reconciliation of the plan sponsor’s objectives for the plan, BEJS recommended a change that resulted in:
A 32% annual cost savings;
Risk mitigation through the introduction of the fiduciary oversight;
Higher grade of investment options selected from an open investment platform;
More inclusive plan amendments; and
Improved educational resources.
Deferred Compensation Solution
The key executives of our corporate client earn substantial bonus income that they want to shield from income taxes, and simultaneously are limited in their ability to contribute to the company-sponsored 401(k) plan due to participation rates of their fellow employees.
BEJS worked with the company to design a plan that allows the executives to defer a portion of their salary and bonus pre-tax, and provides the option for additional “discriminatory” contributions by the company.
The executives now have aggregate deferred compensation balances in excess of $2 million that will grow tax-deferred until retirement, at a “Profit and Loss” (P&L) cost to the company of only the after-tax cost of the “match” that the executives had previously been forced to forego.
Corporate Owned Life Insurance Policy Review
A successful privately-owned company was planning to use $12.9 million of life insurance coverage on its top executives to recover its costs associated with various benefits plans.
BEJS completed a review of the insurance policies and program, and recommended more appropriately designed products offering proprietary pricing features available on a guaranteed issue basis.
As a result, the current death benefit increased by $10.5 million at no increase in cost to the company, and the need for underwriting busy executives was eliminated.
This material is intended for informational purposes only and should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney, tax advisor or plan provider.