Entity Agent Deferred Compensation overview

Transcription

1 Allianz Life Insurance Company of North America Entity Agent Deferred Compensation overview You can set aside money for your future and we will too. P For financial professional use only. Not for use with the public. M-2503-E Page 1 of 10

2 Plan benefits For our top producers, participating in deferred compensation can provide advantages: Flexibility to defer 0%-100% of your entity s commission You have the option to defer your Allianz Life Insurance Company of North America (Allianz) commission that is paid directly to your entity. 1 We contribute money to your account Even if you elect not to defer your entity s commission, you are still eligible to qualify for an Allianz contribution to your plan. The multiplier effect helps grow the amount of money we contribute to your account We multiply our contribution to your account for every consecutive year Allianz contributes to your plan (maximum multiplier is seven). Reduce current income tax liability Income taxes are not due on deferred amounts until they are distributed. (Please consult your tax advisor for details.) Tax-deferred growth Instead of paying tax on the returns of an investment, tax is paid only at a later date, leaving the investment to grow unhindered. How do I qualify? Entities are eligible to participate in the Deferred Compensation Plan if: The entity holds an active Allianz Preferred SM contract. 2 You are contracted with Allianz as a corporation or limited liability company (LLC) and are the sole owner of the entity. If you hold an individual contract with us, please see the Agent Deferred Compensation Plan Overview (M-2503). The entity uses cash accounting and not accrual accounting. 3 The entity has at least $1,000,000 of Allianz fixed annuity or adjusted life insurance production in a calendar year and is enrolled by 12/31/14. 4 Adjusted life insurance production is calculated by multiplying issued Allianz life insurance first-year target premium by 10 for example, $50,000 target premium 10 = $500,000. Then add excess premium dollar-for-dollar. 1 If a state does not recognize your entity contract and we pay commission directly to you instead of to your entity, those commissions paid directly to you may not be deferred. 2 Standard contracted agents who receive a company contribution to their 2014 Deferred Compensation Plan are eligible to participate in the 2015 plan. 3 If a cash accounting entity is participating in the plan and changes to accrual accounting, the entity is automatically terminated from the plan. 4 Products issued in the state of New York are not eligible. Allianz does not provide tax or legal advice. Consult your tax advisor for specifics to your situation. Page 2 of 10

3 How do Allianz and I make contributions? Personal contributions If your entity meets the qualification requirements and elects to participate, you have the option of deferring 0% to 100% of the entity s Allianz commissions. 1 Allianz contribution To be eligible for an Allianz contribution your entity must have a minimum of $1,000,000 of issued fixed annuity (both standard and Allianz Preferred SM ) or adjusted life insurance production in a calendar year. The sum of your entity s production in these categories determines the value of our company contribution. Although the threshold used to calculate the value of your company contribution is determined by all fixed annuity and adjusted life insurance production issued in a calendar year, we only contribute money to your account for the sale of eligible fixed annuity products. After you qualify for the company contribution, we start contributing money to your account when your eligible production on standard or Preferred production reaches $500,000 and the amount we contribute grows as your production grows. It s important to note that we look at eligible standard and eligible Preferred fixed annuity production separately when contributing money to your account, and the value of our contribution is different for standard and Preferred production. For a complete list of eligible products, please visit the deferred compensation Web page on or call Production thresholds Company contribution on eligible standard production Company contribution on eligible Preferred production $1,000,000 $2,000 per $1,000,000 $2,000 per $1,000,000 $3,000,000 $4,000 per $1,000,000 $5,000,000 $4,000 per $1,000,000 $6,000 per $1,000,000 As your entity reaches higher production thresholds, the greater company contribution amount is paid to your entity retroactively for every $500,000 of eligible production. When your entity s fixed annuity and adjusted life insurance production is $1,000,000 in a calendar year, your entity receives ½ credit company contributions for every $500,000 of eligible standard fixed annuity production and $500,000 of eligible Preferred fixed annuity production. 1 If a state does not recognize your entity contract and we pay commission directly to you instead of to your entity, those commissions paid directly to you may not be deferred. 1 Page 3 of 10

4 Entity Deferred Compensation Plan overview The multiplier effect As a reward to our most loyal producers, we multiply our contribution to your entity s account by the number of consecutive years your entity qualifies for an Allianz contribution to the plan. The maximum multiplier is seven. If your entity doesn t issue $1,000,000 of eligible fixed annuity production for one year, we ll protect its multiplier and carry it over to the next year. If your entity fails to qualify for a company contribution for two consecutive calendar years, its multiplier will revert to one when your entity next qualifies. Allianz contributions are IMMEDIATELY VESTED and distributed according to the withdrawal schedule you select during annual open enrollment. How the company contribution and multiplier effect work Year Fixed annuity production Ineligible production Eligible standard production Standard deferral credits $1,000,000 $5,000,000 $6,000,000 $3,500,000 $900,000 $7,000,000 $5,200,000 $8,000,000 $0 $2,000,000 $500,000 $0 $0 $2,000,000 $900,000 $1,200,000 $700,000 $1,000,000 $2,500,000 $1,000,000 $900,000 $3,000,000 $2,000,000 $3,000, Value per credit $2,000 $4,000 $4,000 $2,000 $0 $4,000 $4,000 $4,000 Standard premultiplier value Eligible Preferred production Preferred deferral credits $1,000 $4,000 $10,000 $2,000 $0 $12,000 $8,000 $12,000 $300,000 $2,000,000 $3,000,000 $2,500,000 $0 $2,000,000 $2,300,000 $3,800, Value per credit $2,000 $6,000 $6,000 $4,000 $0 $6,000 $6,000 $6,000 Preferred premultiplier value Total premultiplier value $0 $12,000 $18,000 $10,000 $0 $12,000 $12,000 $21,000 $1,000 $16,000 $28,000 $12,000 $0 $24,000 $20,000 $33,000 Multiplier Allianz contribution $1,000 $32,000 $84,000 $48,000 $0 $120,000 $120,000 $231,000 Cumulative value $1,000 $33,000 $117,000 $165,000 $165,000 $285,000 $405,000 $636,000 This hypothetical example shows how the Allianz company contribution is multiplied by a consecutively greater number each year that your entity qualifies for an Allianz contribution to the plan, for up to seven years. The deferred compensation values assume a 0% accumulation rate and no withdrawals. 2 Participants with a multiplier of three or more as of 12/31/11 are grandfathered with a maximum multiplier of 10. Page 4 of 10

5 Investment options Access to money Both Allianz contributions and personal deferrals are allocated to your entity s account in accordance with the investment options selected. Here s a list of deferred compensation investment options that are actively monitored by the Allianz investment team: Wells Fargo Advantage Money Market Fund Wells Fargo Advantage Short-Term Bond Fund PIMCO Total Return Fund Shenkman High Yield Bond Fund Oakmark Equity and Income Fund BlackRock Global Allocation Fund JPMCB SmartRetirement Income Fund JPMCB SmartRetirement 2015 Fund JPMCB SmartRetirement 2020 Fund JPMCB SmartRetirement 2025 Fund JPMCB SmartRetirement 2030 Fund JPMCB SmartRetirement 2035 Fund JPMCB SmartRetirement 2040 Fund JPMCB SmartRetirement 2045 Fund JPMCB SmartRetirement 2050 Fund Allianz NFJ Dividend Value Fund Dodge & Cox Stock Fund Vanguard Institutional Index Fund T. Rowe Price Growth Stock Fund QMA Small Cap Equity Fund Dimensional International Equity Value Fund Vanguard Mid Cap Index Fund Vanguard Total International Stock Index Fund Allianz does not provide investment advice and does not endorse any particular funds with respect to plan investments. Please review your plan document for important information and disclosures. If any wording in this overview conflicts with the Plan document, the Plan document shall prevail. Your entity can defer its own commissions and the company contribution for as little as three years. The amount and method of payments depend on the payout period that your entity chooses. For each year that your entity qualifies and participates, it will select the payout date and payout period for that year s deferrals (lump sum or up to 10 years). The payout will be based on the amount accumulated in the account on the date payout begins. Payments are considered ordinary income, subject to income tax in effect for the year in which the distribution is received. Amounts paid from the plan are not eligible for any form of tax-deferred rollover and are taxable as income. However, distributions, including those made prior to age 59½, are not subject to a 10% federal additional tax. (Please consult your tax advisor.) It s easy to enroll Annual enrollment is required and your entity must sign an agreement indicating its participation in the Entity Agent Deferred Compensation Plan. By selecting to participate in the plan, your entity agrees to irrevocably waive standard and Allianz Preferred SM bonus compensation for the upcoming year. 3 Page 5 of 10

6 Entity Deferred Compensation Plan overview Frequently asked questions About Allianz contributions How is adjusted life insurance production calculated? We multiply your entity s issued Allianz life insurance target premiums by 10 for example, $50,000 target premium 10 = $500,000. Then we add excess premium dollar-for-dollar. What if my entity has separate contracts with Allianz, for life insurance and annuity business (single line contract)? By electing a single line contract, your entity s deferred comp eligibility will be treated separately under each contract. Allianz will not combine production from separate life insurance and annuity contracts to determine eligibility. Can the value of an Allianz deferral credit change? The value of a credit can be increased or decreased for future-year credits, but future-year credits cannot be less than 90% of the prior year s value. There is no limit to the amount the credit value can increase in future years. When is the Allianz contribution credited to my entity s account? We credit your entity s plan account within 30 days after the end of the year in which the credits were earned. All deferral credits are immediately 100% vested, but must be withdrawn according to withdrawal schedules selected during the applicable plan year enrollment. Is there a limit to the number of deferral credit units my entity can earn? No. There is no limit to the number of credits that your entity can earn in a plan year. There is also no limit to the number of years your entity can participate in the plan, assuming it continues to meet the eligibility criteria. Can the entity still make a voluntary deferral if it doesn t earn at least one deferral credit in a plan year? If your entity produces at least $1,000,000 of Allianz fixed annuity or adjusted life insurance production (except for sales in New York) but did not have $1,000,000 of eligible fixed annuity production, it can still make voluntary deferrals into the plan in the following year. If your entity does not produce $1,000,000 on eligible products in the following year, Allianz will not contribute to its plan. 4 Page 6 of 10

7 Can my entity earn partial Allianz deferral credits? Allianz issues ½ credits starting when your entity has $1,000,000 of issued fixed annuity or adjusted life insurance production and $500,000 of eligible standard or Preferred production in a calendar year. We do not issue credits for thresholds that fall between those stated above. For example, if your entity produces $3,700,000 of eligible Preferred production, Allianz will issue it 3.5 Preferred deferral credits, not 3.7. If I switch from the Agent Plan to the Entity Plan or vice versa does my multiplier carry over? Yes, your multiplier does carry over provided you continue to be eligible for company contributions in consecutive years. What if my entity has an Allianz Preferred SM Agreement with one FMO and a Standard Allianz Agreement with another FMO? Allianz will combine production from both annuity contracts when determining enrollment eligibility and the company contribution amount. What happens to my participation in deferred comp if I elect to participate in the Agent Plan and then obtain an entity Allianz contract sometime during the following year? If you are the sole owner of the entity, you will be deemed to have elected to enroll in the Entity Agent Deferred Compensation Plan, unless you notify Allianz in writing within 30 days of your entity contract date that you do not want to participate in the Entity Plan. Your total fixed annuity and adjusted life insurance production for the calendar year will determine eligibility for a company contribution under both plans. We will look at your Agent and Entity Plans separately when we contribute money to your accounts. The amount we contribute to each plan will be based on eligible production issued under each separate contract. For example, let s assume you enroll in the 2015 plan and produce $1,500,000 in eligible standard production between January 1, 2015 June 30, On July 1, 2015 you terminate your individual contract and contract as a corporation, of which you are the sole owner. From July 1, 2015 to December 31, 2015 you produce $2,000,000 of eligible standard production and your total fixed annuity production for the year is $3,500,000. As it is all standard production, you will receive $2,000 per every $1,000,000 of production earned under the Agent Plan and the Entity Plan. Before accounting for the multiplier effect, our contribution to your Agent Plan would be $3,000 (1.5 deferral credits multiplied by $2,000) and our contribution to your Entity Plan would be $4,000 (2 deferral credits multiplied by $2,000). 5 Page 7 of 10

8 Entity Deferred Compensation Plan overview Frequently asked questions (continued) About plan details When do I determine what percentage of my entity s commission to defer? All elections to defer your entity s commissions must be made in the year prior to the year in which the commission is earned and paid. Voluntary deferrals are only available for commissions that are paid to the entity under the entity plan. Some states require commission payments be made to an individual even if they are licensed as an entity and these commissions may not be deferred. Does my entity need to qualify each year to participate in the plan? Yes. To receive a company contribution for a given year and make voluntary deferrals, your entity must meet the minimum annual production requirements. What if my entity misses the production requirement for one year and surpasses it in the following year? Your entity can fail to qualify for the deferral credits in one calendar year without becoming ineligible for the following calendar year. Can my entity make changes to the investment allocation of its accounts? Yes, your entity may change your investment allocations for new contributions and/or transfer existing balances. Can I opt out of deferred compensation and return to the bonus compensation program? Yes. You may opt out of the deferred compensation plan at the end of any calendar year and return to the bonus compensation program beginning the following calendar year. If you elect to opt out of the plan, any balance in your account will remain in the plan until the scheduled distribution date and you may not defer commission into the voluntary deferral component of the plan. The determination to participate in the plan or bonus compensation is made on an annual basis. About receiving payments If I am in debt to Allianz at the time of a plan distribution, is my payment affected? Yes, your plan payment will be reduced by the maximum amount of debt permitted by Internal Revenue Code section 409A. What if my entity dissolves prior to its scheduled deferred compensation distributions? If dissolution occurs, we pay the distributions as originally elected upon enrollment. Payments will be made to the entity s successor in interest, as determined under applicable law. What if an entity enrolled in the plan becomes owned by more than one owner? The entity s participation in the plan immediately and automatically ceases. Distribution will continue to be paid out on the dates elected at the time of enrollment and payments will be made to the entity. 6 Page 8 of 10

9 About enrollment When does the plan go into effect? Your entity begins earning deferral credits on premium sold as of January 1 of the new plan year. If elected, voluntary deferrals will also begin at this time. Can I enroll my entity anytime? No. Annual open enrollment takes place at the end of every calendar year and must be completed by December 31. You must sign a new plan agreement on an annual basis. This is required even for current plan participants. Can I withdraw from the plan midyear? No. All elections to participate are irrevocable for one plan year. According to IRS regulations, participants may not change deferral elections midyear. Can I select different accounts and percentages for voluntary deferrals and company contributions? No. Voluntary deferrals and company contributions will be credited to the same accounts in the same percentages. About getting account information Who administers the plan? MullinTBG is the recordkeeper for the plan. Please enroll and view balances at When are statements mailed to me showing my balances? Statements are produced quarterly (mailed roughly 30 days following the end of the quarter) for participants who maintain an account balance. Who should I contact for Web access information? Your password and screen name can be obtained by calling MullinTBG at How can I view my accounts online? Visit and enter your password and screen name. First-time users, please call MullinTBG at If you have any questions or concerns about the plan, please contact MullinTBG at or Allianz at Page 9 of 10

10 True to our promises so you can be true to yours. A leading provider of annuities and life insurance, Allianz Life Insurance Company of North America (Allianz) bases each decision on a philosophy of being true: True to our strength as an important part of a leading global financial organization. True to our passion for making wise investment decisions. And true to the people we serve, each and every day. Through a line of innovative products and a network of trusted financial professionals, and with over 2.6 million contracts issued, Allianz helps people as they seek to achieve their financial and retirement goals. Founded in 1896, Allianz is proud to play a vital role in the success of our global parent, Allianz SE, one of the world s largest financial services companies. While we pride ourselves on our financial strength, we re made of much more than our balance sheet. We believe in making a difference with our clients by being true to our commitments and keeping our promises. People rely on Allianz today and count on us for tomorrow when they need us most. Guarantees are backed solely by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. Registered representative participation in the plan is subject to broker/dealer approval. Allianz Life Insurance Company of North America and MullinTBG are not affiliated companies. To the extent any wording in this brochure conflicts with the Plan Document, the Plan Document wording shall prevail. For complete details, see the Plan Document (M-2515-E). This document is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Allianz Life Insurance Company of North America, its affiliated companies, and their representatives and employees do not give legal or tax advice. Product and feature availability may vary by state and broker/dealer. For financial professional use only not for use with the public. Products are issued by Allianz Life Insurance Company of North America, PO Box 59060, Minneapolis, MN (R-11/2014) Page 10 of 10