The Life Income Strategy™ (“LIS”) Program
The Problem
Executives / Professionals are finding it difficult to fund retirement plan due to ERISA Plan contribution limits and top-heavy rules.
Non-qualified deferred compensation plans are subject to attachment by corporate creditors, substantial risk of for feiture by participants; and no current tax deduction by the employer.
Rule 409A, enacted in 2007; requires that an employer-sponsored plan containing deferred compensation benefit promises must be in writing. Written plan documents, at a minimum, must include:
1) amounts being deferred (or the formula for determining amounts deferred);
2) the time and form of payment (including the six-month delay for payments to public company key executives due to separation of service);
3) conditions for initial deferral elections; and
4) conditions for subsequent deferral elections.
The Problem
Executives / Professionals are finding it difficult to fund retirement plan due to ERISA Plan contribution limits and top-heavy rules.
Non-qualified deferred compensation plans are subject to attachment by corporate creditors, substantial risk of for feiture by participants; and no current tax deduction by the employer.
Rule 409A, enacted in 2007; requires that an employer-sponsored plan containing deferred compensation benefit promises must be in writing. Written plan documents, at a minimum, must include:
1) amounts being deferred (or the formula for determining amounts deferred);
2) the time and form of payment (including the six-month delay for payments to public company key executives due to separation of service);
3) conditions for initial deferral elections; and
4) conditions for subsequent deferral elections.
The Solution: The Life income Strategy Program ™
- A selective program that is owned by the executive
- No funding limitations unlike IRA’s, SEP’s and other qualified plans
- The Corporation/Executive determines annual and flexible contribution amounts
- Contributions are fully deductible for a C-Corp
Funds accumulate on a tax-deferred basis and are structured for tax-free distributions - Executive determines amount and timing of distributions
- No age 59 1/2 restrictions
- Plan can be terminated at anytime
- No Deferred Compensation 409A regs
- No setup costs, no annual administrative costs, no IRS forms
- All contract values are Creditor Protected in most states
The Solution: The Life income Strategy Program ™
What is it?
- A selective program that is owned by the executive
- No funding limitations unlike IRA’s, SEP’s and other qualified plans
- The Corporation/Executive determines annual and flexible contribution amounts
- Contributions are fully deductible for a C-Corp
Funds accumulate on a tax-deferred basis and are structured for tax-free distributions - Executive determines amount and timing of distributions
- No age 59 1/2 restrictions
- Plan can be terminated at anytime
- No Deferred Compensation 409A regs
- No setup costs, no annual administrative costs, no IRS forms
- All contract values are Creditor Protected in most states
How does it work?
The LIS program is an after-tax retirement savings plan that works similarly to a Roth IRA or 401(k).
Your annual contributions are made with after-tax dollars, which means all income at retirement will be non-taxable. After-tax contributions also mean you are secure from your employer’s creditors, something that concerns many highly compensated employees.
The LIS program is funded by an Equity Indexed Universal Life policy that offers access to the S&P 500 stock index. With a 1% guaranteed floor.
The LIS program creates the effect of pre-tax savings and tax-deferred investment growth by offering the participant leverage from a non-recourse policy loan in the underlying policy. The policy loan restores the taxes paid at the time of deferral (e.g., $40,000), giving you the effect of a pre-tax plan.
How does it work?
The LIS program is an after-tax retirement savings plan that works similarly to a Roth IRA or 401(k).
Your annual contributions are made with after-tax dollars, which means all income at retirement will be non-taxable. After-tax contributions also mean you are secure from your employer’s creditors, something that concerns many highly compensated employees.
The LIS program is funded by an Equity Indexed Universal Life policy that offers access to the S&P 500 stock index. With a 1% guaranteed floor.
The LIS program creates the effect of pre-tax savings and tax-deferred investment growth by offering the participant leverage from a non-recourse policy loan in the underlying policy. The policy loan restores the taxes paid at the time of deferral (e.g., $40,000), giving you the effect of a pre-tax plan.
