Help Your Clients Retain Top Talent: The Strategic Advantage of Loan Regime Split Dollar

In today’s job market, retaining key employees has never been more challenging. The rise of remote work has reshaped the hiring landscape, allowing your most valuable talent to be recruited by companies across the country—or even across the globe. Simply offering higher salaries or standard benefits may no longer be enough to keep top performers loyal.

To stand out, businesses need innovative solutions that align employee rewards with company goals. That’s where Loan Regime Split Dollar comes in. It’s a creative, tax-efficient strategy that rewards and retains employees while protecting the company’s financial position.

At its core, Loan Regime Split Dollar is a partnership between an employer and employee, designed to benefit both parties:

• Employer-Employee Collaboration: The employer loans premiums to the employee for a life insurance policy owned by the employee.
• Tax Efficiency: The loan is not taxable to the employee and is not deductible for the employer, keeping it straightforward from a tax perspective.
• Cost Recovery: The employer secures repayment through a collateral assignment on the policy, ensuring financial protection.
• Employee Benefits: The employee gains access to the policy’s cash value over time and a significant tax-free death benefit for their family.

Key Benefits for Employers and Employees

For Employers:

1. Retain key employees with a meaningful benefit that’s difficult for competitors to match.
2. Recover all costs over time, making it a sustainable and balanced financial solution.
3. Protect your investment through a lien on the policy’s cash value and death benefit.

For Employees:

1. Gain access to tax-free cash value for personal or future needs.
2. Provide a substantial, tax-free death benefit for their family.
3. Retain control of the policy, including the choice of beneficiaries.

Imagine a business funding a $25,000 annual premium for 10 years for a key employee:

• Over time, the policy builds cash value that the employee can access tax-free, creating a benefit without taxable income during the loan term.
• If the employee leaves, they repay the loan via the policy’s cash value or other assets. This ensures the company is financially whole.
• If the employee passes away, the company is reimbursed for its costs first, and the remaining death benefit—up to $1 million—is paid tax-free to the employee’s family.

For minimal cost to the employee over the policy’s lifetime, they receive significant financial benefits while the employer secures loyalty and mitigates risks.

Loan Regime Split Dollar is more than a benefit—it’s a differentiator. By offering a creative and impactful program like this, you position your company (or your client’s company) as an employer of choice. It demonstrates a commitment to employees’ financial well-being while ensuring that the company’s investment is protected.

In a world where job offers and counteroffers are exchanged at lightning speed, providing a unique and meaningful benefit can make all the difference in retaining top talent.

At Camas Advice, we specialize in advanced planning strategies like Loan Regime Split Dollar that help businesses retain their best employees while maintaining financial control. Whether you’re a financial advisor looking to offer this solution to your clients or a business owner searching for innovative retention tools, we’re here to guide you every step of the way.

• Tailored Solutions: We help structure plans to meet the specific needs of your business and employees.
• Expert Guidance: Our team brings years of experience in advanced planning concepts and retention strategies.
• Comprehensive Support: From design to implementation, we ensure the strategy works seamlessly for you.

Thinking outside the box can set your clients apart in the talent war. Let’s explore how Loan Regime Split Dollar can transform your retention strategy and position your company—or your clients—for success. Reach out to Camas Advice today to learn more.