Deferred Compensation Plan

A deferred compensation plan that covers the target employees is the best solution offered in this situation. A deferred compensation plan allows Bill to choose who he wishes to cover and provide a benefit on a discriminatory basis. The plan is not tax deductible for the most part, but it will allow Bill to give a special benefit. Key man life will only benefit the company. New tax rules make split dollar insurance less attractive than in the past. Cross testing on the 401(k) plan is a very sophisticated maneuver and you will note that Bill has already maxed out his contributions on the retirement plan.