A Flexible Solution to Attract and Retain Key Employees
401(k) Look-Alike Plan with a S.O.L.A.R. Insurance Arrangement: A flexible solution to attract and reward key employees!
In a classic 401(k) Look-Alike Plan, a traditional nonqualified deferred compensation (NQDC) plan, the employee participants choose to defer receipt of a portion of their income and thereby defer the income taxes due on that income. Employers also defer a tax deduction on that compensation and create a liability on their balance sheet. And these plans do little to improve key employee retention.
Is there a better way?
A 401(k) Look-Alike Plan with a S.O.L.A.R. Insurance Arrangement!
With the 401(k) Look Alike Plan with a S.O.L.A.R. Insurance Arrangement you have the flexibility to customize incentive and retention plans to closely fit the needs and objectives your business.
By matching key employee contributions or paying a year-end bonus, you can reward key employees and give them strong financial incentives without the costs, expenses and headaches of a qualified retirement plan.
• Can be offered to selected key employees
• Tax deduction for your business (as long as compensation is reasonable)
• No liability on your balance sheet
How Does It Work?
1. Employee agrees to have you direct a portion of their salary/bonus into a 401(k) Look-Alike Plan with a S.O.L.A.R. Insurance Arrangement.
2. The employee buys an ING IUL-Global Plus insurance policy.
3. You send tax payment to the appropriate taxing authorities as you normally would.
4. You send the ING life companies the salary/bonus net of the taxes paid as a premium on the employee-owned ING IUL-Global Plus policy.
5. The employee requests a Select Loan in the amount of the taxes paid and chooses the Net Loan process so the amount is added as initial premium.
6. You can pay the Select Loan interest annually as an incentive tool. The employee may have an income tax liability from the employer-paid loan interest which can be paid through an additional Select Loan.
These materials are not intended to and cannot be used to avoid tax penalties and they were prepared to support the promotion or marketing of the matters addressed in this document. Each taxpayer should seek advice from an independent tax advisor. The ING Life Companies and their agents and representatives do not give tax or legal advice. This information is general in nature and not comprehensive, the applicable laws change frequently and the strategies suggested may not be suitable for everyone. You should seek advice from your tax and legal advisors regarding your individual situation.
ING Indexed Universal Life–Global Plus (ING IUL-Global Plus), policy form series 1182-12/10, with both a fixed and an equity indexed strategy, may vary by state and may not be available in all states and is issued by Security Life of Denver Insurance Company (Denver, CO) a member of the ING family of companies. All guarantees are based on the financial strength and claims paying ability of Security Life of Denver Insurance Company who is solely responsible for the obligation of its own policies. © 2012 ING North America Insurance Corporation CN0703-3385-0715