831b

Companies can leverage an 831(b) captive, also known as a small insurance company, to reduce insurance costs. Roundstone’s 831(b) captive program builds on the many benefits of captive insurance, like transparency, control and cost savings through the retention of underwriting profits and favorable tax advantages.

How it Works:

Our turnkey program utilizes Section 831(b) of the Internal Revenue Code which allows qualified small insurance companies, with adequate capital, risk shifting and risk distribution; to avoid income tax on underwriting profits. The captive pays tax only on its investment income.

Roundstone administers the program and ensures the requirements necessary to make the 831(b) election for the taxable year are clearly defined for the employer. Who’s a candidate for an 831(b) captive? Companies with these common characteristics:

  • Ownership – private entities owned by an individual or single family
  • Enterprise Size – a diverse risk pool to qualify as insurance
  • Income – businesses with at least $5M average annual income
  • Revenue – companies with $10M to $500M in annual revenue
  • Third Party Insurance – third party insurance is not replaced by an 831(b) captive. In fact, businesses with significant third party insurance costs can benefit from covering a large deductible through the captive.

Interested in an 831(b) captive program? Roundstone can provide you with material and answer questions about our customized approach to understanding each business’ risks and goals to design an 831(b) captive that is the right fit for your clients. Contact Roundstone.