Question 1

What is BOLI and why do banks use it?

Accepted Answer

Bank Owned Life Insurance (BOLI) is a tax-efficient asset used by financial institutions to offset the rising costs of employee benefit programs. It allows banks to finance liabilities like medical coverage and retirement benefits while providing a higher after-tax yield than many alternative investments.

Question 2

How does a Phantom Stock Plan work for key employees?

Accepted Answer

A Phantom Stock plan gives key employees an 'ownership feel' without diluting the owner's actual equity. It is a contractual agreement that rewards employees based on company performance and growth, acting as 'golden handcuffs' to retain top talent.

Question 3

What is a 401(k) Mirror Plan?

Accepted Answer

A 401(k) Mirror Plan (also known as NQDC) allows highly compensated executives to defer income beyond the statutory limits of a traditional 401(k). Contributions are made on a pre-tax basis and grow tax-deferred until distribution.

Question 4

What is 'The Perfect Plan' for executive benefits?

Accepted Answer

The Perfect Plan is a proprietary strategy by Schiff Executive Benefits that reverse-engineers solutions to reach the 'sweet spot': where contributions are pre-tax, growth is tax-deferred, and benefits are ultimately paid tax-free.

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