Deferred Comp - Select Reward (Tax Exempt)

• Any non-governmental tax-exempt organization  
• Employers who want to tie key employees to the business
• Employers who want to reward key employees

Benefits and considerations for the employer

• Encourage loyalty. Employer provides incentive for the key employee to remain loyal to the organization for a pre-determined service period.  
   
• Enjoy simplicity.– No complex liability tracking or actuarial calculations are needed.
   
• Reduce cash flow. Each premium payment reduces annual cash flow. 
   
• Recover the premium cost. If the key employee dies before the end of the service period, the life policy’s tax-free death benefit^* may be used to recover the cost of the premiums paid.

Benefits and considerations for the key employee

• Pay minimal cost. The key employee will pay tax on the value of the life insurance death benefit that’s endorsed to them during the service period. This cost is much less than if the key employee was to personally purchase that amount of life insurance.
   
• Help with taxes. In the year the bonus is received, the policy’s cash value may be used to pay the income tax due. It’s not possible to receive annual payments or defer receipt of the bonus. 
   
• Use for personal needs. If ownership of the life policy is transferred to the key employee, its cash value and death benefit may be used for personal financial needs.
   
• Must qualify. The key employee must be healthy enough to qualify for the life insurance policy.

* If the requirements of IRC Section 101(j) aren't met, then death proceeds from employer-owned life insurance contracts may be taxable as ordinary income in excess of the cost basis.  

Aggregate Financing for Deferred Comp Flyer (BB12609)
Use this with business clients to lead a discussion about whether aggregate financing is appropriate for their plan.
View PDF (PDF) • Order

• Life insurance products

Key materials listed below.

Before the Sale

Select Reward (Tax Exempt) Employer Overview (BB9781)
Use with employers to provide an overview of the plan and how it works. 
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During the Sale

Sample Employer Proposal (BB10081) | Request for Proposal (DD2606)
Sample of customizable proposal for tax-exempt organizations. Includes details on plan design, benefits, and considerations.
View Sample Proposal (PDF) • View Request for Proposal (DOC)

Financial models: Sample illustration with cost and benefit analysis. Prepared from information submitted on RFP.

• Sample Illustration - Deferred Comp Select Reward (Tax Exempt)  (BB10081VUL)
  View (PDF)

After the Sale

Select Reward (Tax Exempt) Participant Overview (BB12062C) 
Use with employees to explain how the plan works and the benefits available to them. Customization available based on if the plan has an endorsement split dollar or death benefit only agreement. 
Customize

Sample agreements: Contains some of the pertinent issues to assist the client's attorneys with drafting the actual agreement.

• Sample Deferred Comp-Select Reward (Tax Exempt) Agreement  (BB11009)
  View (DOC)
• Sample Endorsement Split Dollar - Tax Exempt Agreement  (BB11008)
  View (DOC)

Beneficiary Instructions (DD914E)
Use this form in implementing any endorsement method split dollar agreement.
View PDF (PDF) • View DOC (DOC) • Order

BMA Services Flyer (BB9441)
Outlines the added benefits employers and plan participants get from our administrative services through Business Market Administration (BMA).
View (PDF)

Key materials listed below. 

• Business and Advanced Solutions
• Business Market Administration
• Life Sales Support