Download BUSINESS SUCCESSION PLANNING * Measuring the Opportunities

412(e)(3)
The Retirement Solution
National Life Insurance Company® | Life Insurance Company of the Southwest®
National Life Group is a trade name of National Life Insurance Company, Montpelier, VT, Life Insurance Company of the Southwest (LSW),
Addison, TX and their affiliates. Each company of NL Group is solely responsible for its own financial condition and contractual obligations. LSW is
not an authorized insurer in New York and does not conduct insurance business in New York.
The companies of National Life Group® and their representatives do not offer tax or legal advice. For advice concerning your own situation,
please consult with your appropriate professional advisor. 412(e)(3) retirement plans are offered and administered independently of the
companies of National Life Group. National Life is bound only by the terms of the life insurance contracts issued by the Group insurance
companies.
© 2015 National Life Group®
TC88381(0116)3
THE
RETIREMENT
ISSUE
2
© 2015 National Life Group®
BENEFITS OF A 412(e)(3)
Leverage
business
dollars to fund
tax deductible
personal
benefits
3
Provide a
competitive
benefit to help
attract and
retain highly
qualified
employees
© 2015 National Life Group®
Employer’s
contributions
that are not
included in
income by the
participant
Retirement
Income
The opportunity
to purchase life
insurance with
tax deductible
dollars
412(e)(3) DEFINED BENEFIT PLAN
Funded solely with insurance
company contracts
Contribution and benefit based
on contract guarantees*
*Guarantees are dependent upon the claims-paying ability of the issuing company.
4
© 2015 National Life Group®
DETERMINING TAX DEDUCTION /
CONTRIBUTION
Entry Age
5
© 2015 National Life Group®
Retirement
Age
LIFE INSURANCE IN A 412(e)(3)
Purchased on a pre tax basis
Guaranteed cash value at retirement
Increases tax deduction for the business
May complete your retirement plan
Fringe benefit for employees
© 2015 National Life Group®
LIFE INSURANCE OPTIONS WHEN
THE PARTICIPANT LEAVES THE PLAN:
 Surrender the Policy
 Take a Taxable Distribution

Buy the Policy

Exchange the Policy – Qualified Plan
Exchange Privilege (QPEP)*
*Unique to National Life Group
7
© 2015 National Life Group®
QUALIFIED PLAN EXCHANGE
PRIVILEGE RIDER (QPEP)
HOW IT WORKS
• Participant surrenders policy for its cash surrender value and
retains the proceeds under the plan or rollover to an IRA.
• New policy issued outside of plan for Net Amount at Risk
(Face Amount – CV) without any medical evidence, regardless
of health, at current attained age.
• The newly issued policy can be any type of permanent
insurance offered by the insurance companies of National Life
Group, it does not need to be the same type of insurance as
the policy issued in the qualified plan.
QPEP rider (form series 8518) is issued by National Life Insurance Company. QPEP rider (form series 8336) is issued by Life Insurance
Company of the Southwest.
8
© 2015 National Life Group®
REDUCING OR ELIMINATING
CONTRIBUTIONS
There are three options available if there is a
need to reduce contributions long term:
 Reduce formula
Convert from Fully Insured 412(e)(3)

to traditional defined benefit
 Terminate plan
9
© 2015 National Life Group®
THE 412(e)(3) PLAN SOLUTION
BUSINESS AND
PARTICIPANTS
PERMANENT LIFE
INSURANCE
• Tax Deductible Contribution
• Acquired with pre tax funds
• Retirement benefits
• Reward Yourself and Key
Employees
• Completes the retirement
plan in the event of
premature death
• Tax deferred growth
• Provide Rank and File
meaningful benefit
10
© 2015 National Life Group®
• Provides family with
financial protection
EXECUTIVE
• Income Tax Free Death
Benefit