Nationwide® Executive Bonus Plan and Restrictive Executive Bonus Arrangement (REBA)

An incentive plan using life insurance to benefit your key employees

Why offer an executive bonus plan?
You have to have the right professionals working with you to get the job done. Do you have what it takes to retain the employees who mean the most to your business?

An executive bonus plan using life insurance from Nationwide® may provide just the incentive you need to hang on to your most important employees.

How bonus plans benefits employers
Certainly retention of top talent is the key advantage to bonus plans, but they also offer flexibility, control and tax benefits:

Bonuses are tax deductible for your business
You have discretion in selecting participants
There are no maximum or minimum contribution requirements
No IRS approval needed
The plan is designed to be simple and straightforward
Employees may find it beneficial to stick with you so they won’t lose the benefit
Restrictive Executive Bonus Arrangement (REBA)
In addition to executive bonus benefits listed above, the following benefits also apply:

“Golden handcuffs” are created through a restricted endorsement and vesting schedule
Vesting schedule allows employer to recover some or all of the additional compensation if things with the employee don’t work out
Restrictive endorsement requires employer approval for major changes to policy
Benefits for employees
The executive also gains a level of control and potential financial gains from this plan, including:

The policy funding the executive bonus plan is owned by the employee.
Any tax due on the bonus to the employee can be covered by an additional bonus from the company.
Cash values accumulate tax deferred.
Tax-preferred cash flow can be received from the policy by withdrawals and loans (assuming a non-modified endowment contract remains in force) .
The employee controls the plan including selecting the beneficiary and allocating the assets.
The employee chooses when to make retirement withdrawals and how much they will be.
It’s a life insurance policy rather than a 401k or IRA, so there isn’t a tax penalty for taking a withdrawal prior to age 59 ½. If the employee takes a withdrawal, his or her beneficiaries will receive a reduced death benefit.
Some things you and your employees should keep in mind
This strategy does not guarantee returns or insulate you from losses, including loss of principal.
As your personal situations change (e.g., marriage, birth of a child or job promotion), so will your life insurance needs; care should be taken to ensure that this strategy and product are suitable for your long-term life insurance needs.
You should weigh your objectives, time horizon and risk tolerance as well as any associated costs before investing.
Market volatility can lead to the possibility of needing additional premium in your policy to ensure it does not lapse.
Variable life products allow the policyholder to choose an appropriate amount of life insurance that has an additional cost associated with it.
Loans and partial withdrawals will reduce the cash value and the death benefits payable to your beneficiaries, and withdrawals above the available free amount will incur surrender charges.
Nationwide® and its representatives do not give legal or tax advice; you should consult your legal or tax advisor for answers to specific tax questions.
Surrender charges vary by issue age, gender, underwriting rate class and product; these charges decline over time, so please see your prospectus for details.
The death benefit and all guarantees are subject to the claims-paying ability of the issuing insurance company.
Variable products are sold by prospectus. Carefully consider the investment objectives, risks, charges and expenses that may apply before investing. The prospective contains this and other important information about the investment company. To request a copy, contact your investment professional or write to Nationwide Life Insurance Company, P.O. Box 182150, Columbus, OH 43218-2150. Please read the product and underlying fund prospectuses before investing.

We make several assumptions when we talk about taking loans and partial withdrawals from a policy, including that:

The contract actually qualifies as life insurance according to Internal Revenue Code (IRC) Section 7702
The contract is not a modified endowment contract, or MEC, as defined in IRC Section 7702A
If it meets all of the requirements of Section 7702A, most of the distributions from your policy will be taxed on a first-in/first-out basis
But, if it is a MEC, then any distributions you take from your policy will generally be taxable — and subject to a 10% penalty tax if you’re 59½ or younger 
All individuals selling this product must be licensed insurance agents and registered representatives.

• Not a deposit • Not FDIC or NCUSIF insured • Not guaranteed by the institution • Not insured by any federal government agency • May lose value

Life insurance products are issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Life Insurance Company, Columbus, Ohio.