A salary continuation plan (sometimes also called sick-pay plan) is a formal program for continuing the wages of an employee (including shareholder-employees) in the event of disability.
Business has the ability to install a tax-deductible salary continuation plan for a long time, yet it is a need that is often overlooked due to several misconceptions. Salary continuation plans based on Section 105 of the Internal Revenue Code often are believed to be too complex, too involved, too time-consuming, and limited as to who can qualify. These beliefs are untrue. In fact, exactly the reverse is the case. A salary continuation plan is easy to understand and easy to install.