Wealth Management for Businesses & Business Owners
The experts at 22nd State Bank provide tailored financial solutions to families and businesses. Our aim is to deliver quality advice derived from our relationships within the community, trusted insurers, our underwriting advocacy, and superb technology resources.
Working with businesses in the following areas:
- Advanced Case Design
- Product and underwriting Management
- Annual reviews and analysis
Non-Qualified plans are retirement savings tools for individuals and businesses alike. Unlike Qualified plans, these don’t have to abide by ERISA rules. There are no limitations on the contributions, and if designed appropriately, the savings grow tax-free and can be withdrawn tax-free.
162 Bonus Plan
An Executive Bonus Plan (Section 162) is a way for business owners or companies to provide additional supplemental benefits to key employees or executives. These benefits usually include life insurance policy death benefits as well as cash value accumulations that can be used as a tax-advantaged retirement income supplement. With an Executive Bonus Plan, the business can use tax deductible company funds to selectively provide valued benefits – and this plan can be a valuable tool to attract and retain key executives.
Defined Benefit Plan
This option known as the “golden handcuff” plan, is when a company promises to pay an employee a specified amount of retirement income for a specified period.
409a Deferral Plan
Just like in a 401k plan, a deferred compensation plan is an arrangement whereby an executive or owner defers some portion of their current income until a specified future date. The employer can also make contributions into the plan and apply a vesting schedule to increase the retention aspect of the plan.
A Supplemental Executive Retirement Plan (SERP) is an agreement between an employer and one or more of its employees to provide corporate-sponsored supplemental retirement benefits. This plan can be structured as a defined benefit plan, defined contribution, and a deferral plan.
Defined Contribution Plan
The company promises to contribute a specified amount for a specific period into a retirement account for an employee. At retirement, the accumulated contributions plus earnings are paid out as a retirement income over a specified period.
Split Dollar Agreements
In a Split-Dollar Plan, an employer and employee execute a written agreement that outlines how they will share the premium cost, cash value, and death benefit of a permanent life insurance policy.
A Buy-Sell Plan is a formal contract between business owners that lays out what will happen to each owner’s share of the business upon a triggering event, such as death. A well drafted and properly funded plan can protect the owner’s family and facilitate the continuation of the business.
A funded Buy-Sell Agreement creates a ready buyer for the company, but also it places a fair market value on the company while providing the funds for the buyout. And ultimately this provides harmony between the owners and family of the owners. It removes all the uncertainty on how the transfer will happen – and provides peace of mind with any conflicts that may arise without a plan.
As mentioned, Buy-Sell Agreements create an orderly transfer of the shares of a company, but typically if only one is to die. If designed properly, the cash values of a life insurance contract can be used to buy or redeem shares of an owner who is still living. This creates a Living Buy-Out and provides the living shareholder a supplemental income stream when retirement starts.
Corporate-Owned Life Insurance (COLI)
Corporate Owned Life Insurance is an institutionally priced life insurance contract. It is specifically designed for large corporations so that it may have high cash values at early stages. A few additional advantages include tax-free cash value accumulation, tax-free withdrawals, and tax-free death benefits. Properly configured life insurance funding solutions can afford the company the opportunity to recover all costs associated with a SERP of Deferred Compensation program, Executive Bonus Plans, Split-Dollar Plans, Buy-Sell Agreements, Living Buy-Out Plans, and Key Person coverages. Sometimes COLI is simply used to offset corporate expenses or improve the internal rate of return of a corporation.
Key Person Insurance
This is a policy taken out by a company to compensate said company for the financial loss that would arise from the death or extended incapacity of a key employee.
Bank Owned Life Insurance (BOLI)
Specially designed life insurance products purchased by banks where the bank is the owner and beneficiary of the policy. It is a tax-efficient toll that often provides higher yields than other bank assets, which helps the bank offset the high cost of employee benefits such as qualified pensions, group benefits or health insurance and can be used as a recovery vehicle when providing deferred compensation to attract and retain key personnel.