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There are different ways for an executive to get some protection against her employer’s insolvency. While some use non-insurance arrangements, some use contracts with an insurance company or other insurance underwriter. The Internal Revenue Service has recognized some carefully arranged purchases of insurance against an employer’s inability or failure to pay an obligation as not funding a deferred compensation plan’s promise. For example, IRS Ltr. Ruls. 9344038 (Aug. 2, 1993), 8406012 (Nov. 5, 1983). Among the described facts, the participant paid for the insurance. Also, the participant negotiated the insurance, and did so without involving the employer. A letter ruling is not precedent. IRC (26 U.S.C.) § 6110(k)(3). Each taxpayer should get her lawyer’s advice. Because this insurance is an obligee’s personal protection against her employer’s inability or failure to pay deferred compensation, it is not a “plan” (or the employer’s) investment; rather, it is a participant’s personal insurance against one or more risks about her employer’s ability or willingness to meet its deferred compensation obligation. An insurer will underwrite this risk only if the insurer receives detailed financial information about the employer or obligor, and considers the information reliable. An underwriter might look (at least) for CPA-audited financial statements and minimum revenue and capital positions of the obligor. StockShield’s “Deferred Compensation Protection Trust” http://stockshield.com/our-products/deferred-compensation-protection-trust/ is a different idea. I’ve never evaluated it.

We file it with the parent company as the employer. Then on lines 11 & 12 we list each QSLOB. Your client will be one QSLOB and the new entity will be another. They both have to qualify.

If you're talking about a firm that is paid a fee to recommend investments to someone else, I don't think so. The test is whether capital is a material income-producing factor, i.e., does the company have to use its money to make more money. My impression is that a "bank or similar institution" refers to a company that uses money to make more money by, for example, loaning its money to another business who repays it with interest. I don't think a "similar institution" would be any company in the financial field; I would interpret the "similar institution" along the lines of other non-bank lenders (e.g., payday lenders, factoring companies, etc.). A financial advisory firm presumably wouldn't be using its own money to make more money. Rather, its income production would consist of the fees received for the personal services of its employees making recommendations to its clients.

If it is calc'd per pay period then it is per pay period (period ?). Option 1. I think such changes have the potential to be discriminatory.