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Sample Cases & Output (click to view) Each document below requires the Adobe Acrobat Reader. Please be patient -- each document may take a minute or more to load. If you do not have this widely available program, click here for more information, or here to download it. Use the "Back" command in your browser to return to this list from the Adobe Acrobat Reader.
Sample Case #1: Loan-Based Deferred Compensationfor an executive of a Profit-Making Organization. This illustrates Loan-Based Deferred Compensation for an executive of a Profit-Making Organization using a $2,500,000 policy with five $100,000 premiums. The insured executive foregoes $100,000 of compensation each year for five years which, from a cash flow perspective, covers a major portion of the employer's loans to the executive. A gross-up bonus (also known as a "double" bonus) is illustrated to provide the executive with the funds for loan interest payments as well as the tax on the bonus. The illustration reflects a $600,000 policy loan at the beginning of year 21 and $100,000 a year thereafter. $500,000 of the $600,000 policy loan in year 21 is shown repaying the loans from the employer with the balance of $100,000 -- along with the $100,000 loans in succeeding years -- directed to tax free retirement income for the executive. The plan produces a negative charge to earnings in all years for the employer (a negative charge to earnings results in a credit to earnings), the only executive benefit available that does in from the inception of the plan. Severance is included in this illustration (see Pages 19 - 23) that provides the executive with reimbursement for his/her compensation adjustments. (This is an optional benefit that can be included in the benefit illustration if desired.) Note: Be certain to study all the reports available in order to get a full understanding of this outstanding benefit plan. Analysis of the Executive’s Comparative Benefits: This narrative report reflects the efficiency of the plan from the executive’s perspective. (It applies to either an executive of the profit-making organization examined in Sample Case #1 above or the tax exempt organization examined in Sample Case #2 below. Sample Case #2: Loan-Based Deferred Compensation for an executive of a Tax Exempt Organization. This illustrates Loan-Based Deferred Compensation for an executive of a Tax Exempt Organization using a $2,500,000 policy with five $100,000 premiums. The insured executive foregoes $100,000 of compensation each year for five years which, from a cash flow perspective, covers all of the employer's loans to the executive. A gross-up bonus (also known as a "double" bonus) is illustrated to provide the executive with the funds for loan interest payments as well as the tax on the bonus. The illustration reflects a $600,000 policy loan at the beginning of year 21 and $100,000 a year thereafter. $500,000 of the $600,000 policy loan in year 21 is shown repaying the loans from the employer with the balance of $100,000 -- along with the $100,000 loans in succeeding years -- directed to tax free retirement income for the executive. The plan produces a negative charge to earnings in all years for the employer (a negative charge to earnings results in a credit to earnings), the only executive benefit available that does in from the inception of the plan. Severance is included in this illustration (see Pages 19 - 23) that provides the executive with reimbursement for his/her compensation adjustments. (This is an optional benefit that can be included in the benefit illustration if desired.) Note: Be certain to study all the reports available in order to get a full understanding of this outstanding benefit plan. |
