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What is the S.E.E.D. Plan and how does it work?  top
A plan based on 1954 tax law that allows for "the working family". The self-employed person hires their spouse and provides a medical reimbursement plan and W-2 wages. All family health insurance premiums and any out of pocket medical expenses are reimbursed to the spouse from the company checkbook as part of the plan. The reimbursements paid to the spouse are not included as income and the business deducts these costs as an operating expense. Corporations operate under slightly different rules. To see a more complete explanation of those companies that qualify click here.
What kind of medical expenses can be deducted? top
Family insurance premiums such as: medical, dental, vision, cancer, certain long-term care, disability and life insurance on the employee. You can also deduct medical expenses not reimbursed by third party payers. More complete list.
How much could my clients save in taxes? top
The last several years our clients have had average tax savings of over $2000 a year by using the S.E.E.D. Plan. See what your clients could save.
Which clients could benefit and qualify for the Section 105 medical reimbursement plan? top
All companies can benefit by implementing the S.E.E.D. Plan:
- Those operating their business as a sole proprietorship, partnership, LLC or (C) and (S) Corporations.
- Companies where the owners spouse is or could be a bona-fide employee
- Businesses that have few if any employees other than family members
- Families that have medical insurance premiums and out of pocket health care expenses not paid for by their insurance company
- Employers whose taxable business income is below the self-employment or Social Security wage base of $87,000 in 2003
More complete explanation of those companies that qualify.
Can (S) Corporations take advantage of medical reimbursement plans? top
Yes. Shareholders electing S-corporation status and executing a medical reimbursement plan as allowed by several IRS tax codes can save taxes. The corporation can implement an employee benefit plan to include reimbursement to the stockholder-employee of family health insurance premiums and all unreimbursed medical expenses. To see a more complete explanation of those companies that qualify click here.
Does the employer have to cover all their employees? top
Most employers want to cover only family members. If your clients have employees other than their spouses, they must follow nondiscriminatory rules required by the labor department. See who can be excluded.
How does the government view Section 105 plans? top
The Section 105 plans are not well known, but legal. Currently there are over 50,000 self-employed people in the United States participating in these plans. More than thirty years ago the IRS addressed this issue. Since that period of time it has been reviewed by the service a number of times. Several of their writings: Internal Revenue Service (Letter Ruling 9409006) and Revenue Ruling 71-588
What would you do for our clients and how expensive is the S.E.E.D. Plan? top
The S.E.E.D. Plan is a "turn-key" implementation and administrative service designed to insure proper documentation of the employee benefit plan. Services and costs.
What do you want from me? top
We are interested in networking with financial consultants/tax specialists who work with the small employer market. By providing the benefits of a Section 105 plan to this select group of people we create a win/win situation. Your clients win by creating tax savings and an increased bottom line profit. You win by furthering your position as an innovative practitioner and a financial resource to your clients. Improving the financial strength of your clients allows you the opportunity to sell more supporting services.
Can I or my clients do this ourselves? top
There are IRS, DOL and ERISA guidelines that Section 105 plans must follow. Our plan provides a convenient, reliable and inexpensive approach to meeting these rules and regulations. Most tax consultants do not specialize in employee benefit planning and prefer to use an outside agency. We look forward to working with your clients to provide these services.
How much administrative time is this going to take my clients? top
By utilizing the services of the S.E.E.D. Plan your clients will have a minimal management requirement. Our clients tell us they have no more than two-four hours throughout the year administering their plan. When you consider the average yearly savings is in excess of $2000 the time is well spent.
Can the S.E.E.D. Plan tax savings be invested in a retirement program? top
A retirement planning firm could help set up or expand a retirement portfolio. As an example, for every $1000 of S.E.E.D. Plan tax savings invested in a qualified retirement plan, your clients can actually deposit $1175 (based on the lowest FIT rate). This is true because the retirement deposit is ALSO a tax deduction.
Why should my clients make a decision now? top
The IRS does not allow backdating of medical reimbursement plans. It is important to start immediately to save tax dollars. The S.E.E.D. Plan can be started any day of the year.
If this is so good why haven't I heard of these plans before? top
In the 1970's these plans were very popular. The IRS imposed some limits on the plans in the early 1980's and the use diminished. In recent years the increasing cost of healthcare and insurance premiums, combined with fewer deductions allowed for the small employer, have created renewed interest in medical reimbursement plans.
My clients can already deduct medical insurance premiums. Why use your plan? top
Current law allows the small employer to deduct only part of the qualified medical insurance premium they pay to arrive at the adjusted gross income. The S.E.E.D. Plan allows a full 100% deduction against the FIT as well as the self-employment tax and any state tax. Thus, substantially more taxes are saved.
What would my clients have to do to sign up for the S.E.E.D. Plan? top
Implementing the S.E.E.D. Plan is fast, easy and convenient. We will:
- Analyze their situation to see if they can save tax dollars.
- Customize a Section 105 Plan for their company.
- Coordinate with you and your client.
- Provide all the answers you both need.
- Supply them with the necessary enrollment forms to implement their plan.
Email us with your client's contact information or inquire about the S.E.E.D. plan.  Back
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