1. Tax Reform: Business Income Tax Highlights
Presenter’s name
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2. Small business means big business
Protecting their business from the loss of a key employee is the #1 issue facing business owners1
The “quit rate” in January was 3.3M people2
19% of family business participants have not completed any planning other than writing a will – and only 36% have an exit plan.3
At any given time, 40% of businesses are wrestling with transfer of ownership and control.4
Over the next 20 years, $4.8 trillion of net worth will be transferred.4
For more than 60 years, Principal has focused on serving the needs, challenges and opportunities faced by business owners and key employees.
Principal Business Owner Survey, conducted by Harris Interactive.
2 US Census Bureau 3 Family Firm Institute:
4 Family Firm Institute, 2009
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3. Key planning needs for business owners
Succession planning
Key employee retention
Retirement income
Legacy and estate planning
At Principal, we start by breaking the BIG question down into 4 key areas: Business Organizations, Succession Strategies, Estate Planning, and Retirement Income.
From there, we approach each key area as a building block for the next – one piece at a time.
Within each building block of the Ag Planning Report, the information and solutions are customized to focus in on your specific conditions and goals. By tackling them “one piece at a time”, we can make steady, tangible, and coordinated progress.
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4. Three primary types of changes
Tax Cuts and Jobs Act
Three primary types of changes
Income tax rate changes C corporations
Income tax rate changes - passthrough entities
Changes to executive compensation
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5. Income tax rate changes
C corporations

6. Comparison of 2017 and 2018 corporate tax provisions
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7. C corporation changes Corporate AMT is repealed
Impact on corporate owned life insurance policies
Accumulated earnings tax
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8. Income tax rate changes
Passthrough entities

9. Comparison of 2017 and 2018 law Tax Cuts and Jobs Act
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10. Qualified business income deduction
1 Pass-through entities include S corporations, partnerships, sole proprietorships, and LLCs that are taxed as any of these pass-through entity types
2 Examples include accountants, attorneys, doctors and dentists
3 Examples include manufacturing, construction and retail businesses
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11. Comparison of individual federal tax rates
2017
2018
Tax rate
Married filing jointly
10%
$0 - $18,650
Up to $19,050
15%
$18,651 - $75,900
12%
$19,051 - $77,400
25%
$75,901 - $153,100
22%
$77,401 - $165,000
28%
$153,101 - $233,350
24%
$165,001 - $315,000
33%
$233,351 - $416,700
32%
$315,001 - $400,000
35%
$416,701 - $470,700
$400,001 - $600,000
39.6%
Over $470,700
37%
Over $600,000
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12. Changes to executive compensation

13. Comparison of 2017 and 2018 law Tax Cuts and Jobs Act
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14. Comparison of 2017 and 2018 law Tax Cuts and Jobs Act
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15. Planning opportunities created by tax changes

16. Planning opportunities: For businesses
Business needs haven’t changed
More discretionary income
Impact on retirement solutions
Lower overall tax burden for company makes more funding available for executive benefits
Company out-of-pocket cost is less when using double bonus design due to employee lower tax rates
Impact on other business solutions
Additional dollars available for business protection and succession and key person
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17. Planning opportunities: For owners of passthrough entities
Individual income tax provisions expire (“sunset”) after 2025
Seven years to put extra tax savings aside
Use tax savings to fund vehicles now that can receive favorable income tax treatment when rates have gone back up
Principal offers product features designed for retirement income savings
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18. Supporting you every step of the way
Business Market Administration
Supporting you every step of the way
Deciding on
a solution
Plan services keep clients coming back, and keep you free to focus on building sales
We regard our business insurance solutions as complete plans – not just individual policies.  And the services you and your clients receive reflect this approach.
Dedicated BMA administrator will be assigned to provide personalized service and support.
Determining a solution: Working in tandem with our Advanced Solutions team (which is staffed with attorneys, CPAs, and plan design specialists), BMA can assist with case design and billing consultation.
Plan implementation/new enrollments: BMA can assist with assembling appropriate submission forms based on the selected plan design.
Online access: Employer-sponsors may view the following online: News & Info, Life Premium Information, Life Policy Information, Life Policy Values, Specific Policy Details (only when policies are corporate-owned) With corporate-owned variable life insurance, the employer may also request policy changes online, such as division transfers, allocation percentage changes for future premiums, etc. Insured-participants may view their respective policy information online when policies are individually-owned. And with variable life insurance, they may also request policy changes online, such as division transfers, allocation percentage changes, etc.
List billing – Principal sends consolidated payment reminders covering all policies under the plan.  This enables the employer-sponsor to pay policy premiums via a single check.  Annual, semi-annual, quarterly, and monthly payment modes available.
Ongoing policy administration and service – The BMA administrator is able to assist with any policy adjustment questions, service requests, illustration needs, etc. 
Annual plan-level reporting – Summary Annual Reports mailed directly to employer-sponsors.
Plan status and strategy review – Upon request, BMA administrator can assist producer with reviewing policy status relative to the client’s goals.
View our BMA Services Flyer (BB9441)
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19. Questions?

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Principal National Life Insurance Company and Principal Life Insurance Company, Des Moines, Iowa
Insurance issued by Principal National Life Insurance Co. (except in NY) and Principal Life Insurance Co. Securities offered through Principal Securities, Inc., , Member SIPC, and/or independent broker/dealers. Principal National, Principal Life and Principal Securities are members of the Principal Financial Group®, Des Moines, IA
For financial professional use only. Not for distribution to the public.
No part of this presentation may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system, without prior written permission from the Principal Financial Group®.
Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
We are not attorneys nor practicing CPAs, and we encourage you to consult your legal and accounting professionals to determine whether any of the ideas presented here would be suitable for your company.
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BB | 03/2018 | | © 2018 Principal Financial Services, Inc.