Non-qualified deferred compensation can work for your business

It's an employee benefit you control—not the IRS or anyone else. And it can be a real incentive for select employees you choose to reward.

Non-qualified deferred compensation is a benefit that can be extraordinarily valuable because the insurance benefit helps protect their families. The increasing cash value helps protect their retirement against inflation and taxes.

This benefit can help you increase morale and reward loyalty. It's a benefit that can help you recruit new employees as well.

Here's how non-qualified deferred compensation works
It's life insurance that can act as a supplemental retirement benefit for you and your employees. The cash value of the insurance contract can provide an extra benefit for retirement. And the nature of deferred compensation can be valuable at retirement because the key person you're rewarding today may be taxed at a lower rate in the future.

The plan is flexible and can be tied to your company goals. And the cumulative costs of deferred compensation usually are less than those of current compensation.

The non-qualified deferred compensation plan's cash values can be used by the business as:

• A source of funding for any purpose.
• Borrowed at any time at competitive interest rates.
• Collateral for loans.

Who is eligible for non-qualified deferred compensation?
You and any employee you choose can be eligible. The person you choose can be vital to profits or someone with essential management skills, sales ability, a valuable knack for creativity or a special skill.

Your financial representative with Thrivent Financial for Lutherans can help you identify and value key people. He or she also can show ways your business can informally fund an affordable non-qualified deferred compensation plan.

Section 162 bonus plan: Reassurance for employers, a reward for employees

You can give the employees you choose a rewarding bonus to enhance their retirement plans and also help provide life insurance protection for their families.

A Section 162 bonus plan from Thrivent Financial for Lutherans lets you choose the person and the benefits the person will receive. And you can deduct the bonus as a fully deductible salary expense.

There are no reporting hassles and no government approval is necessary.

It's a simple, cost-effective and flexible answer to your employee recruiting and retaining process. Your employee can own the contract and name a personal beneficiary. Like any cash bonus, the amount is taxable income to the employee.

Life insurance cash values that accumulate are tax-deferred and the death benefit is income tax-free!

The plan becomes a tax-deductible bonus you can pay to one or more key employees of your business, including yourself!

Split dollar: A partnership for success

This plan allows the business and the employee to work as a team to obtain an employee's life insurance.

Here's the split:

• The company pays for all or part of the life insurance plan and gets its premium back if the employee dies.
• The employee's beneficiary gets the remaining death benefit.

An employer can choose to implement one of two different split dollar programs. The employer's choice of the program will determine the ownership and beneficiary arrangements of the life insurance contract.

Your business gets its money back and the employee gets the benefit
You and your employee both win.

The premiums you've paid will be returned. Your only "loss" is the interest your business might have earned on the premiums over the course of the life insurance contract. Instead of salary increases that are eaten up by income taxes, this plan can help develop happy, loyal, committed employees.

Your employees will enjoy many advantages:

• Access to permanent life insurance protection when they need it most.
• Split payment of premiums mean the costs are much less than buying protection on their own.
• Values grow on a tax-deferred basis, and can be used for a retirement fund.

Why you will like the split-dollar plan

• You can select important people from your business, including yourself, to be in the plan.
• Your premium payments in dollars are returned to you and your employees are encouraged to stay with you!
• You enjoy flexibility. Your business can own the insurance with a special beneficiary designation, or your employee can own it with a collateral assignment to the business.

Contact your financial representative with Thrivent Financial for Lutherans to find out how a 162 executive bonus or split dollar insurance plan could help your business.

Thrivent Financial for Lutherans, and its respective associates and employees cannot provide legal, tax or accounting advice or services. Work with your team of professionals, including your Thrivent Financial representative, your attorney and tax professional to determine and implement the appropriate option.

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