Wrapping Up 2020: Content Guide

We’ve taken it upon ourselves to consolidate all of our content from this year into one post, for your enjoyment! This holiday season many of us might find ourselves with more downtime than usual. We thought we would suggest some content pieces for those interested in all things compensation. For the podcast lovers, we encourage you to listen to one of our 2020 webinars. Prefer to scroll instead of listen? Check out one of our white papers, guides, or blog posts. Lastly, in a year during which so few in person meetings were held, we thought we’d make it easier for you to navigate to the LinkedIn pages of our EBS consultants, a few of our webinar partners, and our company page. We would love to start the year 2021 off by connecting with a few of you.


This year EBS took advantage of working together while apart. We were able to host and be a part of three joint webinars this year. For our last two webinars of the year, we shifted with the times and decided to turn our cameras on. With so many of us working remotely it’s nice to at times see the face of the person doing the talking.


Join our subject matter experts to brush up or to dive in to one of the topics below.  As always, stick around (or fast forward to the end) for a Q&A session.


The COVID economy has caused you to confront the flaws of your previous rewards approach and now you must determine what role value-sharing should play going forward—assuming it has any role at all. So, what should you do?

VisionLink and EBS would like to help you answer these questions. Listen now to our joint webinar, 4 Keys to Incentive Compensation Success in an Uncertain Economy. In this broadcast, you will learn why the right kind of incentive plans are more important now than ever before. We will show you how to create a value-sharing approach that will work in any economy and give your rewards strategy the flexibility and depth it will need going forward.


Featured Presenters: Steve Doire of Clearwater Analytics, Patrick Tuttle of JP Morgan, Don Curristan of EBS, Chris Rich of EBS, and Chris Wyrtzen of EBS.

Listen to a live discussion on How Insurance Carriers are Enhancing Returns and Obtaining Capital Relief in a Low Rate Environment, recorded on November 10th.

Topics covered:

  • Overview on trends in Insurance Asset Management
  • Discussion of specific asset strategies especially alternatives.
  • Discussion of ICOLI
  • How ICOLI can be used to mitigate executive benefit plan costs



Featured Presenters: Trevor Lattin of EBS, Chris Rich of EBS, and Jeff Roberts of StockShield.

Listen to a live webinar on how to best navigate 162(m) with deferred compensation plans recorded on November 18th.

The presentation reviews new tax planning opportunities created by recent legislation. The following topics are covered:

  • The 2017 Tax Cuts and Jobs Act (the “2017 Act”) modified Internal Revenue Code Section 162(m) which increased the number of companies subject to Section 162(m), increased the number of covered employees at each company, and eliminated the exemption for performance-based compensation and commissions in excess of $1 million.
  • Now that several years have passed since the 2017 Act, more compensation is subject to Section 162(m) limits as grandfathered employment agreements begin to expire.

This webinar highlights a new tax planning opportunity for companies who already sponsor a voluntary deferred compensation plan.


EBS continued to further examine important topics in a number of white papers that we developed throughout the year. We covered a range of subjects including split dollar arrangements, phantom stock, board compensation, ICOLI, NQDC, Section 162(m), Executive Stock Compensation, LTIP, and back to the basics of personal financial planning – in light of COVID-19. Below you’ll find short descriptions of each piece along with a link to download.

White Papers:


If you are considering the use of a loan regime split dollar arrangement, we invite you to review our white paper, “A Practical Guide to Accounting for Loan Regime Split Dollar Arrangements.” It will provide clarity of the accounting and disclosure issues, and guidance as to the most favorable plan design.

Loan Regime Split Dollar arrangements have received a lot of publicity recently as an attractive alternative to traditional Supplemental Executive Retirement Plans and other forms of non-qualified deferred compensation, especially among non-profit organizations seeking possible relief from the new 21% excise tax.  Among the frequently cited benefits of such arrangements are the relatively favorable accounting treatment and disclosure requirements.  However, those potential advantages may not be realized unless the program is properly structured and managed.



If your plan has lost its original intention or effectiveness, we invite you to discuss its structure with EBS during which we may offer modifications to improve its ability to meet shareholders’ objectives and create value for participants.

We’ve updated one of our most downloaded white papers from 2015 concerning the exquisite reality of phantom stock.  It’s our mission to always keep you up-to-date. So, we invite you to download our 2020 edition, expressly for owners of private and closely held companies.

If you only remember these five valuable points, you’ll be ahead of most midsize company owners.

  1. Collaborate with executive benefit professionals early in consideration
  2. Determine a value formula for the stock and the amounts to issue
  3. Design the plan around your corporate objectives
  4. Fund the plan, set aside assets
  5. Secure the plan with a rabbi trust



In this white paper, “Two Ways Directors Can Use Board Compensation to Save for Retirement” we outline how independent directors can establish their own qualified defined benefit or defined contribution plan. We also discuss how to defer Restricted Stock Units into a company sponsored program.

In the late 1990s and early 2000s, many of the pension and benefit programs available to Board Members of public companies were eliminated. But the demands and risks of board membership have intensified, and compensation levels have increased.

Today’s board members receive compensation in the form of equity awards (often as restricted stock units), cash retainers, and meeting fees. Each of these elements can be tax-deferred and serve as the fuel to fund a retirement program.



Insurance Company-Owned Life Insurance (ICOLI) provides an opportunity for insurance companies to enhance portfolio yields in a manner that is immediately accretive to earnings.

Corporate-Owned and Bank-Owned Life Insurance have long been used as an effective tool for the dual purpose of financing employee benefit liabilities and optimizing the after-tax yield on invested assets. And in this continuing low interest rate environment, insurance companies are finding that Insurance Company-Owned Life Insurance (ICOLI) provides an opportunity to enhance portfolio yields in a manner that is immediately accretive to earnings and has a positive capital impact. The flexibility of the ICOLI structure allows a purchaser to broaden its asset allocation strategy without a negative RBC impact or, perhaps, to simply “clean up” its Schedule BA. As of December 31, 2018, more than a dozen well known insurance companies each reported ICOLI assets in excess of $1 billion.

If you are considering an ICOLI investment or if you would simply like to better understand the potential benefits and the related tax, accounting and regulatory issues, we invite you to review our recently posted white paper, “Enhance Yield, Improve the Balance Sheet and Fund Liabilities with ICOLI”.



The NQDC Exit Strategy has the potential to create greater after‐tax income at retirement over what the executive could do on their own using a combination of NQDC distributions and an individual investment portfolio.

A Deal Worth Your Consideration: A carefully structured NQDC Exit Strategy can provide a tax‐efficient alternative to installment distributions from a nonqualified deferred compensation plan. This strategy can eliminate the five significant risks of NQDC plans and put the executive in control of their assets.

Executives can exit heavily taxed retirement benefits for uniquely designed tax‐favored life insurance funded contracts on the life of the executive or the executive and his or her spouse. The Exit Strategy introduces important financial, tax, and accounting considerations potential participants and outside advisers must evaluate.




Read about this planning strategy in our latest article, “Section 162(m) Deferred Compensation Plans: A Win/Win for Executives & Their Employers.” The article outlines the key provisions required to be included in the plan, and addresses the issue of benefit security of non-qualified plans which, in some cases, is of concern to participants.

Section 162(m), added to the tax code in 1993, was designed by Congress to rein in excessive executive compensation by significantly increasing the after-tax cost of amounts paid to certain key employees above $1 million. However, it proved to be largely ineffective as Compensation Committees continued to set executive compensation at whatever level they felt necessary to provide a competitive total rewards package.

To improve its effectiveness, Congress strengthened Section 162(m) in the Tax Cuts and Jobs Act of 2017 by eliminating an important exception for “performance-based” pay, and by changing the definition of a “covered employee” so that the $1 million deduction limitation continues to apply after retirement.

However, a properly designed (modified) non-qualified deferred compensation plan can be used to mitigate the impact of these new provisions and provide significant tax savings while, at the same time, enhancing the value of benefits to covered executives.

If you listen and enjoy this podcast, don’t forget to check out our webinar that further discusses this topic.

Blog Posts:

Executive Stock Compensation: Rethinking LTIP Design for Greater Flexibility, Effectiveness, and Value.

Stock compensation issued under a Long-Term Incentive Plan often represents the most significant component of the total rewards package for senior executives and key employees. The trend in LTIP design over the last 10+ years has resulted in a reduction in an emphasis on stock options as the primary equity compensation vehicle to a more balance portfolio approach using a mix of equity incentive awards. It is not uncommon today to see Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) play a prominent role in the LTIP design.  Why? Three reasons: Flexibility of plan design, potential tax advantages and administrative simplicity.

In this blog post discussing Executive Stock Compensation, we look at the reasons underlying this trend and suggest that you reconsider your LTIP design in an attempt to increase its effectiveness in meeting the Company’s objectives and delivering maximum value to participants.


Can I Withdraw Funds From my Account, or Freeze Deferrals? 

Personal Financial Planning In The Wake Of COVID-19

Time to Re-Focus on Basic Needs

In recent years, we have all had to deal with unimagined threats to our physical and financial health. The 2008 financial crisis lead us to focus on prudent asset management; and then, after enjoying 10+ years of extraordinary equity market growth, the COVID-19 Pandemic reminded how fragile our health and the economy can be.

As a result, it may be a good time to re-think the risk management measures we have in place with respect to the financial security of our families, our investment portfolios and the threats to the value of business interests.

That’s all we have for you this year.  Please continue to follow along our resource page for upcoming content in 2021 and connect with us on Twitter and LinkedIn.  As always, we encourage you to reach out to us with any questions.  No questions?  Drop us a line if there’s something you’d like to see us delve into and discuss in 2021.  We look forward to connecting with and hearing from you in the New Year.

Personal Financial Planning In The Wake Of COVID-19

Time to Re-Focus on Basic Needs


In recent years, we have all had to deal with unimagined threats to our physical and financial health. The 2008 financial crisis lead us to focus on prudent asset management; and then, after enjoying 10+ years of extraordinary equity market growth, the COVID-19 Pandemic reminded how fragile our health and the economy can be.

As a result, it may be a good time to re-think the risk management measures we have in place with respect to the financial security of our families, our investment portfolios and the threats to the value of business interests.

Specifically, to reconsider the:

  • adequacy of liquid resources,
  • investment risk tolerance,
  • security of retirement savings,
  • exposure to tax rate risk,
  • adequacy of life, disability and long-term care insurance coverages and,
  • plans in place to protect the value of business interests.

Tax Risks

Tax planning is an important component of risk management with respect to invested assets, retirement savings and any plans for transferring business interests. In a recent opinion piece in the Wall Street Journal, Philip DeMuth, the well-known investment advisor and author of several investment books, pointed out that we are currently living in a “Golden Age of Taxes – the lowest rates we may see for decades.” He goes on to summarize the potential tax increases that we could see in the not too distant future to offset the extraordinary economic stimulus spending of 2020. For example, the scheduled 2026 “sunsetting” of many of the tax benefits of the 2017 Tax Cuts and Jobs Act might be accelerated resulting in increases in individual and corporate tax rates, a reemergence of the AMT, reversal of the doubling of the federal estate tax exemption and an increase in capital gain rates and social security taxes.

He concludes the piece by suggesting,the smart move for high earners is to play defense.  Contribute to an after-tax 401(k) plan and convert your traditional IRA to a Roth. That way, you pay the taxes at today’s lower rates.”

One More Idea!

One option Mr. DeMuth failed to mention as an effective hedge against future tax increases is a life insurance-based supplemental retirement plan; a concept that has been around for many years, but which is much improved in recent years with the introduction of a wide range of competitive products.

In comparison to life insurance-based plans of years past, a contemporary program can provide competitive pricing, the flexibility to meet specific individual and/or business needs and a greater range of potential benefits. The matrix on the following page provides a comparative analysis of the key characteristics of personal after-tax savings in a mutual fund portfolio versus a contemporary life insurance-based plan.

Characteristic Mutual Fund Portfolio Life Insurance-Based Savings Plan
Taxation · After-tax contributions
· Partially tax-deferred accumulation
· Taxable reallocation / rebalancing
· Taxable distributions at blended ordinary / capital gain rates
“Roth-Like” tax characteristics:
– After-tax contributions
– Tax-deferred accumulation
– Tax-free reallocation / rebalancing
– Non-taxable distributions (if properly structured)
Investment Options · A wide range of individual funds
· Model portfolio options
· A wide range of individual funds
· Model portfolio options
· Equity index funds with downside protection
Contribution / Distribution Flexibility · Complete flexibility, subject to tax and liquidity considerations · Contribution flexibility, subject to possible underwriting considerations
· Non-taxable withdrawals at any time
Liquidity · Ranges from complete to limited, depending on asset class
· Possibly limited by tax considerations
· Access to policy cash value at any time through non-taxable withdrawals and loans
Security · Complete control through asset ownership (unless restricted by trust, if used)
· Fully portable
· Complete control through asset ownership
· Fully portable
Other Features / Benefits – Personal · Transfers of partial interests possible, if desired · Features designed to maximize non-taxable withdrawals while limiting tax risks.
· Optional long-term care benefits
· Significant estate planning flexibility
Other Features / Benefits – Business · Diversification of net worth: An opportunity to build assets outside business · Diversification of net worth: An opportunity to build assets outside of business
· May facilitate business succession planning, and protection of business value
Risks / Issues · Credit risk of investment / asset manager
· Market / interest rate risk
· Net Investment Income surtax (3.8%)
· Risk of adverse changes in tax law
· Insurance company credit risk
– In some, but not all, cases
· Market / interest rate risk
– Offset by downside protection in equity index products
· Potential impact of underwriting
· Risk of adverse changes in tax law

Comparative IRR:  Life Insurance vs. Mutual Fund Portfolio

The following is a hypothetical analysis of the internal rates of return from an investment in a contemporary variable universal life insurance (VUL) contract versus a portfolio of mutual funds.  The assumptions on which the analysis is based are included below.


  • The projected after-tax IRR in the short-term is better with a mutual fund portfolio because of the up-front loads and expenses associated with the VUL contract (see the following page for a comparative analysis of expenses)
  • However, over the long term, the projected after-tax IRR of the VUL contact (with or without consideration of the death benefit) is superior to that for the mutual fund portfolio.
  • A contemporary life insurance-based supplemental retirement plan providing a combination of tax-advantaged savings, protection against future tax increases and cost-effective insurance coverages could be a valuable component to your personal financial plan.

Expense Comparison

The following is an analysis of the projected loads and expenses of the hypothetical VUL contract in comparison to the projected tax cost of the hypothetical mutual fund investment. The comparative advantage is highlighted in green.


  • The projected tax costs of the mutual fund portfolio are less than the projected loads and expenses of the VUL contract in the early years; but,
  • When viewed from a long-term perspective, the VUL contract may represent a more cost-efficient savings vehicle, and it provides a number of additional financial planning / risk management benefits.

In Summary

If it is time to re-think your personal financial plans and risk management measures, consider including a contemporary life insurance-based supplemental retirement plan in the mix.  A well designed and properly administered program may represent a valuable addition to your long-term financial plans, providing:

  • Tax-advantaged liquid savings
  • A hedge against future tax increases,
  • A significant death benefit (and optional chronic illness benefits),
  • Protection of the value of business interests and,
  • Professional management, essential to maximizing benefits and minimizing tax risks.

For more information about how EBS could help in this regard, simply contact Chris Rich (617-904-9444 x2) who wrote this blog.


P.S.  If you’re a participant in a Deferred Compensation Plan, take a look at Bill MacDonald’s post before this that addresses the ability to take distributions from nonqualified plans.