American Construction Supply
Prepared exclusively for the owners of

American Construction Supply

A custom-built 831(b) captive insurance and nonqualified deferred compensation strategy — designed around ACS's revenue profile, contract risk, and the enterprise exposures a concrete construction distributor actually carries.
Confidential Strategy Illustration
Meridian, Idaho
Live model — adjust the inputs to your numbers
Integrity · Innovation · Impact
Strategy One

831(b) Captive Insurance

Page 1 of 4
Your Inputs

Fund Your Own Insurance Company

Premiums paid to ACS's own captive are deductible to the operating company and build reserves covering risks commercial policies exclude — contract default, dispute resolution, supply chain interruption, political risk. Coverage in force equals 2× premium, and unused premium becomes owner surplus.

Annual Captive Premium $2,000,000
$250K$2.9M limit*
Year-1 Tax Savings
Premium × 42.3% combined rate
10-Yr Tax Savings (Flat)
Before any investment growth
10-Yr Investment Growth
Savings invested at 8%/yr
Coverage In Force
2× premium in policy limits, every year
10-Yr Total Value Created
Tax savings + growth combined
Captive Surplus Model

Where Unused Premium Goes: Back to the Owners

Every premium dollar not paid out in claims becomes company surplus inside the captive — owned by ACS's shareholders, invested (modeled at your selected growth rate), and accessible over time through dividends or loans. Set an expected claims rate and watch the surplus build.

Assumed Annual Claims Rate 5.0%
0%25%
10-Yr Premiums Into Captive
10-Yr Claims Paid
Plus est. fixed program costs of $46K/yr
Surplus Retained (Flat)
Premiums − claims − program costs
Year-10 Surplus w/ Growth
Available to owners via dividends or loans

Plain English

What Is a Captive Insurance Company?

A captive is an insurance company that ACS owns. Instead of paying premiums to a commercial carrier and never seeing them again, the operating company pays deductible premiums to its own licensed insurer, which writes policies for the fortuitous risks the commercial market excludes or prices poorly — a canceled anchor contract, a supplier failure, a dispute that shuts down a job.

Under section 831(b) of the tax code, a small captive can elect to be taxed only on its investment income — premium income is tax-deferred, much the way a 401(k) defers compensation. Contributions are subject to an annual limit indexed by the IRS.

ACS Operating Co. Premiums (Deductible) ACS Captive Claims + Owner Surplus

To qualify, the arrangement must operate like real insurance and pass a four-part test: genuine risk transfer out of the operating company, risk distribution across many unrelated insureds (via risk pools), coverage of fortuitous rather than ordinary business risk, and adherence to the ordinary principles of insurance — real underwriting, real policies, a real claims process.

When claims stay low, the difference stays in the captive as surplus owned by ACS's shareholders. It can be invested, borrowed against, or distributed as qualified dividends over time — which is why business owners describe a well-run captive as insurance that can pay you back.

Risk transfer Risk distribution Fortuitous risk Insurance principles
Strategy Two

Nonqualified Deferred Compensation

Page 2 of 4
Your Inputs

Defer Income on Your Terms

Owners and key ACS leaders defer compensation above 401(k) limits. Deferred amounts escape current federal and Idaho tax, compound inside the plan, and are taxed only when distributed — on a schedule you design, ideally in lower-income years. Unlike qualified retirement plans, NQDC balances are not subject to required minimum distributions (RMDs), no IRS contribution ceilings apply, and there are no early-withdrawal age penalties tied to 59½.

No RMDs No IRS contribution limits Distribution timing you choose Golden handcuffs for key employees
Annual Compensation Deferred $500,000
$0$1.5M
Year-1 Tax Savings
Deferral × 42.3% combined rate
10-Yr Tax Savings (Flat)
Before any investment growth
10-Yr Investment Growth
Savings invested at 8%/yr
Capital Working Pre-Tax
Full dollars invested, not 57.7¢ after tax
10-Yr Total Value Created
Tax savings + growth combined
Deferral Account Trajectory

Your Deferred Balance, Compounding Untaxed

Each year's deferral is invested at your selected growth rate inside the plan. Because nothing is carved out for current tax and no RMDs force money out, the full balance compounds until the distribution dates you elect.

Plain English

What Is an NQDC Plan?

A nonqualified deferred compensation plan is a written promise between ACS and a select group of owners or key employees: instead of taking part of this year's compensation now — and losing over 40 cents of every dollar to federal and Idaho tax — the participant elects to receive it in a future year. The deferred amount is invested and grows pre-tax in the meantime.

"Nonqualified" means the plan sits outside the ERISA rules that govern 401(k)s. That's the source of its flexibility: no IRS contribution limits, no discrimination testing, no required minimum distributions, and no 59½ early-withdrawal age. The company chooses who participates and can design vesting that keeps key people in their seats.

The trade-offs are structural, not optional. Distribution elections are made in advance under IRC §409A and are largely irrevocable, and deferred balances remain an unsecured promise of the company — participants stand with ACS's general creditors until paid. For owners confident in their own company, that is usually an acceptable trade for decades of pre-tax compounding.

At distribution, payments are taxed as ordinary income — which is the point: participants choose distribution years when their bracket is lower, converting today's top-bracket income into tomorrow's lower-bracket income while the full balance compounds untouched.

Both Strategies Together

Combined Tax & Savings Impact

Page 3 of 4

Combined Impact

American Construction Supply · Captive + NQDC
10-Year Total Value Created
Year-1 Tax Savings
Kept out of the IRS & Idaho's hands this year
10-Yr Savings / 10-Yr Growth
Flat tax savings + compounding growth
Every pre-tax dollar redirected… vs. tax paid if taken as income today
57.7¢ kept & working for ACS
Savings Trajectory

Tax Savings: Flat vs. Invested at 8%

Cumulative combined tax savings from both strategies. The navy line banks the savings; the gold line puts each year's savings to work at your selected growth rate — the gap between them is pure investment growth.

Flat tax savings (banked) Tax savings + compounding growth
Schedule

Tax Savings Schedule

Updates live with the sliders on pages 1 and 2. Growth assumes each year's savings are invested at your selected growth rate, compounding annually.

Year Captive Savings NQDC Savings Annual Total Cumulative (Flat) Growth Portion Total w/ Growth
The Cost of Waiting

What Doing Nothing Costs

If these strategies are not implemented, the tax below is simply paid — every year — and the growth that money would have earned never happens. These figures use the same inputs and growth rate as the rest of this illustration.

Tax Overpaid Every Year
Written to the IRS & Idaho annually, gone
Lost Over 10 Years (Flat)
Ten years of unnecessary tax checks
Lost Over 10 Years w/ Growth
Including the compounding those dollars never earn

Model Assumptions — Editable

The Numbers Behind This Illustration

Change any input below and every figure in this proposal — all three pages — recalculates instantly.

Federal Bracket (MFJ, 2026)
Taxable income thresholds per IRS Rev. Proc. 2025-32
Assumed Growth Rate
Annual, compounding; applied to savings & surplus
Company Gross Revenue
Caps the captive premium at 15% of revenue
Resulting Premium Limit
$2.9M
831(b) statutory limit applies
Idaho Flat Rate
5.3%
2026 individual rate (HB 40)
Combined Rate Applied
42.3%
Federal + Idaho, additive
Coverage Multiple
2.0×
Policy limits vs. premium
Captive Program Costs
$46K/yr
Estimated fixed admin/ceding
The Path Forward

Recommendation

Page 4 of 4
Step One
01 — Keep What's Working

Don't Change a Thing That's Already Working

Keep your current CPA and advisory firm. They know ACS's books, your filings, and your history — that relationship is an asset, and nothing in this proposal replaces it. Whatever is already working for American Construction Supply should keep running exactly as it is.

My role is different: I work concurrently with your existing team, focused narrowly on the complex executive benefit and tax strategies that sit outside the scope of everyday accounting and compliance work.

Step Two
02 — Start Here

Implement These Two Strategies First

Based on the limited amount I currently know about your company, the 831(b) captive and the NQDC plan have the largest financial impact and make the most sense to implement initially — they address real, uninsured risk and real top-bracket tax exposure at the same time, and the numbers in this proposal are yours to stress-test with the sliders.

A deeper look at ACS's financials, contracts, and ownership goals will sharpen the premium sizing and deferral design — that's the first working session.

Down the Road
03 — What Comes Next

Additional Strategies in This Niche

These two strategies are the start, not the whole playbook. Complex executive benefit and tax planning is a deep niche, and as ACS's picture comes into focus there are additional strategies worth evaluating together down the road:

Split-dollar life insurance Cash balance / defined benefit plans Key-person & buy-sell funding Cost segregation Succession & estate freezes Charitable & entity structuring
The Shameless Pitch
04 — The Ask

Two Short Meetings a Year

None of these strategies are new — Fortune 500 companies have used them for decades. What's new is that they're now practical for a company like ACS, and most businesses your size simply never have anyone whose job it is to bring them up.

So here's the shameless pitch: 15–30 minutes with me, twice a year. We review these strategies and others like them, check what's changed in the tax code and in your business, and decide together if anything is worth acting on. That small commitment is designed to make a significant financial impact on ACS's ability to stay relevant long into the future — while simultaneously putting more of your hard-earned money in your pocket.

Let's put the first 30 minutes on the calendar