Supplemental Benefit Program™
Frequently Asked Questions

 "The Supplemental Benefit Program™ is a program designed to create a tax advantageous Non-Qualified Retirement asset financed by various major banks via an interest only loan. The beauty of the program is that the client receives a lump sum amount of money and gets it compounding on a tax-deferred basis. Withdrawals to supplement retirement income are not subject to income taxes under current tax law."

1.  Q:   Do I keep collecting the accounts receivable, so I can pay my
            overhead expenses? 

     A:   Yes.  This program does not affect your cash flow since you are not

            factoring (selling at a discount) your receivables.

2.  Q:   What is the potential downside to this program?

     A:    The downside is the possibility that the long-term growth rate of

            return does not exceed the after tax cost of the program.

3.  Q:   Can I quit the program at anytime?

     A:    Yes.  You can stop the plan at any time.  The loan can be prepaid

            without penalties.

4.  Q:   How does this program work when one partner does not

            wish to participate?

     A:    If one of the partners does not wish to participate, probably

            because of age, the rest of the group can do the planning under the

            personal loan method.

5.  Q:   What happens if we bring in another partner?

     A:    A new partner would in most cases result in a larger receivable         

            basis.  When the receivables increase, a new plan could be

            established for the new partner.

6.    Q:   What if my receivables balance increases/decreases?

       A:   You can request the bank to give you additional amounts to invest

              in case of an increase, or, if it decreases, you may make a partial

              loan payment without penalties.

7.    Q:   What happens if I retire or sell my business?

       A:    At the time of retirement or when the business is being sold, the

              loan could be repaid with the proceeds of the receivables.  The

              bank will give 180 days to your corporation to repay the principal. 

              Once the loan is totally repaid, the bank releases the second

              collateral and then, you own 100% of the insurance contract.  

8.    Q:   What happens if the receivables do not completely pay off the

              loan?

       A:    The balance will be paid with part of the cash value inside the life

              insurance policy.

9.    Q:   Why can't the client just go to the bank and borrow against

              receivables?

       A:  He can. However, the client may not be able to obtain the loan

            agreement terms that our attorneys have negotiated with the legal

            departments of large banks around the nation.  Also, without the

            documents and agreements that have been drawn up in this

            Supplemental Retirement Program, more than likely, most of the tax

            advantages of the program will be eliminated.  The end result could

            be that the client would have to pay income taxes, as regular

            income, on the money he received as a result of financing his

            receivables. 

10.     Q: Can I retire early?

A:  Yes. Our program is completely flexible whereas a qualified

     pension plan is not.     

11.     Q: What happens if one of the partners has medical problems?

A:  The financial service professional will help to find the proper

      funding vehicle.        

12.     Q:  Do I need to be incorporated?

A:   Yes.  The retirement program is created by a corporation or partnership for the benefit of its owners or partners.  

13.     Q:  Who does the funding vehicle selection?

A:   You select the allocation with the help of the financial service

      professional that does the implementation of the program.

14.     Q:  Can I put the insurance inside a Trust document?

A:   Yes.  It will be a living revocable trust that will become irrevocable

      after your death.

15.     Q:  We are (10) partners and (5) non-partners.  How will this

             program work?

       A:  The program applies only to the partners.  For the non-partners and

            other executives, a "Non-qualified Deferred Compensation Plan"

            can be implemented.

16.     Q:  Do I need to have the retirement distributions paid out over a

             15-year period?

       A:   No.  You may withdraw your money over a different distribution

             period.  Fifteen years is only a guideline we use to illustrate the

             benefits.  Withdrawals are flexible, however, to avoid taxation, the

             insurance policy must never be canceled.

17.     Q:  Since I am married, can I use a survivorship life insurance

             policy?

       A:   Yes, if there is not a wide age discrepancy between spouses.  A

             second to die insurance is more efficient and will give you a greater

             cash value accumulation.

18.     Q:  Does the program apply to states where life insurance cash

             value is not protected?  Can the program stand on its

             economics basis?

       A:   Yes.  The tax advantages of using a non-modified endowment

             contract, the financial leverage, and the large cash value

             accumulation created to supplement retirement, which can be

             distributed "not subject to income taxes", makes big economic

             sense to the client and the tax or legal advisors.

19.     Q:  Is there a legal memo on the aspects of the program?

A:   Yes, there is a "Confidential Memorandum" prepared by the Legal

      Advisor retained by the client to do the legal work.

20.     Q:  Who prepares the legal documents?

A:  The Legal Advisor retained by the client with offices in the same

      State of the client. Our organization has agreements with major law

      offices around the nation to prepare the legal documents.

21.     Q:  Can any closely held business participate in this program?

       A:   Yes.  The program applies to any closely held business.  Instead of

              looking into the receivables, as we do when working with

              professionals in private practice (Doctors, CPA, Lawyers), we look

              into the Net Equity of the business reflected in the corporate

              balance sheet, which can be increased by adding the market value

              of the business or blue-sky.

22.     Q:  Is there any ongoing cost to maintain the program?

       A:   None. 

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