Serving Business Owners, Individuals and Groups

Section 79 Plans

 

What is a Section 79 Plan?
Protection, Retirement, Innovation

A permanent benefit life insurance plan (using IRS codes) that can add substantial retirement income via sheltered cash accumulation and protection to the business owner(s) as well as the employees at a minimal cost and in a tax-advantaged way.

Why Would A Company (and a Business Owner) Want to Implement a Section 79 Plan*?

1. Additional Permanent Life Insurance Protection
2. No Limits on Funding
3. Tax-Deferred Growth of Funds
4. Employee Benefit with Minimal Costs
5. Tax Deductabilty of Plan
6. Income-Tax Free Survivor Benefit
7. Distances Assets from Company Creditors
8. Program Supported by Specific IRS Tax Code and Regulations

 
Basic Structure:

FOR THE BUSINESS OWNER AND KEY EMPLOYEES

  1. Business Pays Tax Deductible Premium on Corporate
    Sponsored Group Life Insurance Policy (permanent 
    life) on behalf of the business owner or key employee
  2. Life Insurance Company Issues Insurance Policy 
    Insuring Key Employee's Life
  3. Premium is only Partially Taxable to Owner-Employee 
    or Key Employee  
    1. Employee Owns Policy and All Rights Associated with the Policy
    2. Income Tax-Free Death Benefit is Paid to Key
      Employee's Beneficiary
  5. Cash Value can be used to Provide Tax-Free 
    Retirement Income♣

FOR EMPLOYEES

  1. Business Implements Group Life Insurance Plan.  Employee Chooses Type and Benefit Amount.
  2. Typically, most employees select only $50,000 of Group Term Insurance Coverage Under the Plan (minimal cost).
  3. Company Pays Tax Deductible Premium for Employee(s) Selected Life Insurance Policy
  4. Employee Recognizes an "Economic Benefit" as Taxable Income (on policys > $50,000 Death Benefit) and Owns the Insurance Policy
  5. Death Benefit's Paid Income-Tax Free to Employee's Named Beneficiaries
  6. If the Employee Selects a Permanent Life Insurance Policy, the Employee Can Withdraw Excess Cash Value Income-Tax Free (Policy Loan) for Retirement Income.

 

Advantages of a Section 79 Plan:

  • Business Contributions are Tax Deductible
  • Cash Value Grows Tax-Deferred
  • Can Provide Tax-Free Income Stream for Insured Employee via Policy Loans and Withdrawls♣
  • Death Benefit Paid Income Tax-Free to Named Beneficiaries

 


Contact Us to Get More Information and See How a Section 79 Plan could be of Benefit to You.

 

 

 

♣ This is not intended as tax or legal advice.  We advise consulting with your attorney or tax professional prior to engaging in any of these advanced programs.  Policy loans and withdrawls reduce the policy's cash value and death benefits (and may result in a taxable event).  Withdrawls up to the basis paid into the contract and loans thereafter will not create an immediate taxable event, but substantial tax implications could occur upon contract lapse or surrender. 

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