CASD Enhancement/Buy-Out Solution

How It Works

At a high level, we have developed a proprietary solution designed to:

  • Shorten the duration risk of in-force CASD/LRSD plans from the institution's perspective

  • Enhance and guarantee benefits for the participants involved

Benefits for Participants

Our solution offers several significant advantages for participants:

  • Increased Annual Retirement Benefit: Elevate your projected annual retirement benefit by 110-150% of its current value, ensuring a more comfortable and financially secure retirement.

  • Guaranteed Benefits: Enjoy peace of mind knowing that your retirement benefits are guaranteed.

  • Tax-Free Benefits: Retain the tax-free status of your benefits, simplifying your financial planning and maximizing your retirement income.

  • No Imputed Income Taxation: Eliminate the burden of imputed income taxation, where applicable.

  • Streamlined Access: Access your annual benefits without the need for institutional sign-off, providing greater flexibility and control over your retirement funds.

Benefits for Organizations/Employers

Our solution also provides significant advantages for organizations and employers:

  • Capped Duration Risk: Manage and cap the duration risk on your investments effectively. For example:

    • 20-Year Cap at current yield/Applicable Federal Rate (AFR)

    • 15-Year Cap at 1% yield moving forward

    • 10-Year Cap at 0% yield moving forward

  • Protection in Case of Participant’s Death: If a participant passes away before the end of the stated term, the plan functions as originally intended. The employer is repaid all contributions plus interest immediately from the policy death benefit.

  • Return on Investment: If the participant outlives the stated term, the pool repays the employer everything it is owed, ensuring the organization’s investment is protected and returned in full.

This innovative solution not only enhances the benefits for participants but also provides organizations with a secure and efficient way to manage their investment risks, making it a win-win for all parties involved.

Case Study Example

1. Sample CEO’s Split Dollar Plan benefit projection currently shows 16 distributions of $60,000/year after tax (policy number yyyyyyyyy) and 19 distributions of $65,000/year after tax (policy number xxxxxxxx). To keep it simple, let's just call it $125,000/year for 19 years.

  • Our recommendation is to add CEO’s rights in the Split Dollar Plan into a Trust Pool of similar pooled assets in exchange for one of the following options:

    • An annuity that will guarantee a benefit of 19 distributions of $180,000/year after tax and

    • An annuity that will guarantee a benefit of 25 distributions of $145,000/year after tax and retention of a fixed dollar portion of permanent life insurance for named beneficiaries.

    • A lump sum payout of $2,008,461.

Contact Us

A Modern Approach to Executive Compensation & Retention

791 East 3rd Street Suite 200

Boston MA 02127