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Section 79

A Section 79 plan offers employers an opportunity to purchase life insurance for employees on a tax-advantaged basis.

This type of plan offers several advantages:
•    Executive gets to exclude a portion (generally 35-40%) of the employer contribution from income.
•    Tax-advantaged life insurance for key employees' personal or business needs,
•    Income tax deduction at the corporate level,
•    High percentage of plan cost allocated to key employees,
•    Provides supplementary retirement income,
•    Attracts and retains key employees, and
•    Offers a limited funding commitment.

Factors to Consider:
•    Should be a demonstrated need for life insurance, 
•    Owner-employee is generally highly compensated ($200,000+)
•    Plan contribution is at least $25,000,
•    Special rules apply to groups fewer than 10 employees,
•    Per capita rank and file cost is low, but very large employee groups may drive up costs,
•    Union employees may be excluded, and
•    Plan involves 5-year funding commitment.

*Policy loans and withdrawals reduce the policy's cash value and death benefit and may result in a taxable event.