Financing Nonqualified Plan Liabilities with Cash Flow: 

Advantages:
- Simple
- ROE greater than promised, benefits company
- Provides current cash flow to grow the company

Disadvantages:
- Liquidity (increased risk to participant)
- Company liable for benefit payments regardless of earnings
- “Legacy Cost” to future management to pay future benefits

Financing Nonqualified Plan Liabilities with Mutual Funds:

Advantages:
   - Investments can be used to offset participant liabilities
   - Investment selections from a diversified mutual fund universe
   - Asset values based on underlying investments

Disadvantages:
   - Tax impact on realized gains/losses
   - Investments subject to market value fluctuations

Financing Nonqualified Plan Liabilities with Corporate Owned Life Insurance (COLI):

Advantages:
- Tax-efficient growth of policy earnings
- Positive accounting treatment of policy earnings
- Investment selections from a diversified fund universe
- Life insurance component can be used to provide additional benefits and cost recovery

Disadvantages:
   - Potential underwriting challenges
   - Cost of insurance policy fees and expenses in early years

 

Securities offered through M Holdings Securities, Inc., a Registered Broker/Dealer, Member FINRA/SIPC. Investment Advisory Services offered through Molewski Financial Partners. Molewski Financial Partners is independently owned and operated and is a member of M Financial Group. Please go to www.mfin.com and click on “Disclosure Statement” at the bottom of the home page for further details regarding this relationship. Disclaimer

The principal place of business and the state of domicile for Molewski Financial Partners is: 100 Gateway Drive, Suite 300, Bethlehem, PA 18017. Phone: 610-865-2600.

Copyright 2008 Molewski Financial Partners

Proper state registration is mandatory prior to conducting business in any state.

Variable life and annuity products, as well as other securities products, may be sold in AZ, CA, CT, DE, FL, IL, MA, MD, NH, NJ, NY, PA, AND VA. Residents of other states should consult with a local registered representative for securities products.

Molewski Financial Partners is presently licensed to sell traditional life insurance in PA, NJ, FL, NY and CA (Michael D. Molewski, California license number 0826974). Insurance services are limited to residents of the above listed states. Residents of other states should consult with a local agent for insurance services.