Tri-Zen As An Asset: How Tri-Zen Improves Your Balance Sheet


 

Most benefit plans are a cost to the employer. They are a form of compensation and so are deductible to the employer thus really only costing the employer 65% of the actual cost of the benefit paid out. However at the end of the day, benefits are a cost. From a P&L perspective any cost reduces earnings/ profitability.

 
Why then is Tri-Zen an asset to the employer?
While Tri-Zen is a superb recruit and retain strategy, from an accounting perspective it is not a form of compensation to the employee. Technically it is a loan to the employee and as such is not an expense but an asset. The loan will be repaid by life insurance on the death of the employee. Because it is a loan it is NOT a cost and so does not reduce earnings, nor does it trigger FICA costs.
From a tax code perspective this comes under the tax code call Loan regime split dollar §1.7872-15.
As a result, this form of benefit strategy whether financed as with Tri-Zen or just traditional corporate loan regime split dollar is treated as an asset by the employer.

For a more detailed explanation please contact NIW at 972.755.1582:

David Greene           dgreene@niwcorp.com

Daen Wombwell      dwombwell@niwcorp.com