Arlington Benefits Group

As a business owner, you need to keep track of many factors: retaining employees with attractive benefits, protecting against unforeseen risks, planning for your own future, and ensuring your business's continuation. As part of your solid financial planning team, Arlington Benefits Group can help you through every stage of your business planning.

Retaining Your Employees

You know how hard it is to recruit top talent to your organization. In today's climate, it can be even more difficult to retain your key employees. Arlington Benefits Group offers a number of strategies to reward employee loyalty.

Deferred Compensation Planning

Deferred compensation provides a way for employers to reward their key executives by helping them find a method, either in a qualified or nonqualified plan, to defer income and the taxes on the income to later years, as well as help provide supplemental income for disability or retirement.

Qualified Plans: There are several types of qualified retirement plants. The plan design may allow employees to contribute, and in some plans only the employer contributes. Penalties typically apply if you withdraw funds before age 59 ½.

401(k): Employees can contribute a portion of their pre-tax salaries to a qualified tax-deferred retirement plan. Funds grow tax-free until the money is withdrawn.

Profit-Sharing Plans: These qualified plans allow employees to share in company profits. Employer contributions may be dependent on the company's profitability.

Nonqualified Plans: Nonqualified Retirement plans allow highly compensated executives who may be "maxed out" on qualified plans a way to defer taxable income in a nonqualified plan to help provide supplemental income for disability or retirement. The employer may also make matching contributions on a percentage of the deferrals to enhance the plan.

Retirement plans

Defined Benefit: This is a tax-deductible, company-qualified retirement plan where the benefit to participants is defined in advance, based on criteria such as salary history and years of service, and in which the employer bears the investment risk.

A Section 412(i) plan is a type of defined benefit plan which may be funded exclusively with an annuity contract or with a combination of life insurance and an annuity. For those with inadequate life insurance protection, the 412(i) plan can offer life insurance coverage on a tax-efficient basis.

Employee Stock Ownership Program (ESOP) Planning: An employee stock ownership program is a tax-exempt, qualified profit-sharing plan designed to invest in the stock of the sponsor. The plan is permitted to purchase employer stocks and to take out loans from a third-party vendor for that purpose without violating qualified plan rules.

Executive retention plans

Executive Bonus Plan: Key executives are critical to the success of any company. Retaining these individuals can be challenging in today's competitive business environment. Consider implementing an executive benefits plan in addition to executive compensation for your key employees that may include: key person insurance, buy/sell agreements, non qualified retirement plans, deferred compensation, supplemental disability plans.

Restricted Executive Bonus Arrangement (REBA): Provides a way for employers to help highly compensated executives fund life insurance in a cost-effective manner. By allowing restricted access to policy cash values, employers can create a "golden handcuffs" benefit to help retain key executives.

Protecting your business

You have likely invested many years of work into your business. That is why you want to protect it when you may no longer be around to run the business, should that be retirement or something unexpected such as disability or death. By developing a business continuation plan, you can create a road map for your beneficiaries and key employees to follow when executing the transfer or sale of your business. As part of that road map, life insurance can play an important role by providing the funds needed to help keep your operation running. Arlington Benefits Group can help with the following:

Key person coverage

Who is considered a key person in your business? The man or woman you rely on when you are not in the office? The one who works best with your customers? The person who finds creative ways to finance your business? A life insurance policy on the key person's life owned by the business may help the transition. At the death of the insured, the business can use the income tax-free life insurance process to help replace the revenue lost by the untimely death of a key person while the business searches for a successor. (For a C Corporation, all or a portion of the life insurance proceeds may be subject to the corporate alternative minimum tax.)

Buy-Sell Agreement

A buy-sell agreement is a legally binding contract that can be used with all types of businesses. It stipulates that upon the death, retirement, disability, or other withdrawal of a principal, his/her share of the business must be sold to the remaining partners/shareholders of the business. Life insurance can help to fund the transaction. There are three primary types of buy-sell agreements: cross purchase, stock redemption, and "wait-and-see" plans.

I. Cross-Purchase Plan: With this arrangement, each business owner purchases life and/or disability insurance on the other business owners. When disability or death occurs, the remaining business owners use the policy proceeds to purchase their pro rata or other portion of the withdrawing owner's business share.

II. Stock Redemption Plan: With this type of plan, the business-rather than individual owners-purchases life insurance policies on the individual owners and is the beneficiary of each policy. In the event of an owner's death or disability, the policy benefits will be used to purchase the deceased or disabled owner's interest in the business.