Salary Continuation Plan

This is an arrangement in which an employer agrees to continue payment of an employee's salary (or portion of) for a specific time at the employees death, retirement or disability.  The employer may self-insure (dollar-for-dollar) or purchase life insurance (discounted dollars) on the employee with the employer as the beneficiary.  Proceeds from the policy would go to pay future salary benefits.

WHAT ARE THE ADVANTAGES:

• Tax-Free Death Benefit
• Helps employer retain and attract key employees
• No IRS approval
• Can discriminate
• Life Insurance Cash Values are an asset to the business
• Key employees receive benefits at no cost - only taxed when received as ordinary income
• Does not affect qualified retirement plan deferral amounts
• Company receives tax deduction when employee receives benefits
• Can assist in future buyout of the company

It acts as a "golden handcuff" because if the employee leaves employment, the agreement will terminate. 

 

For a personalized solution for your client's needs please contact us at 866.452.3670, or email us at sales@pipaclife.com.