Mike Scully breaks down how Baycrest Consultants Endless Money Loop changed the game for one of their California Club's.

Fort Myers, FL 

October 14, 2025

Mike Scully breaks down how Baycrest Consultants Endless Money Loop changed the game for one of their California Club's.  

How our Endless Money Loop Turned Punitive Taxes into a Win–Win: How a California Country Club and Its GM Gained $20K in Take-Home Pay Without Increasing Club Payroll Expenses

California is such a beautiful state, but it’s tax burden can feel like a giant vise on high earners and their employers. Take the case of one of our private country club General Managers that earns an annual $750,000 salary. Under state and federal rates, any compensation over $500,000 is taxed at roughly 46%. That means the GM’s extra $250,000 translates into just $130,000 of net pay after surrendering 54% to Uncle Sam.

Instead of accepting that outcome, the club and its GM turned to us and our proprietary deferred-compensation strategy known as the Endless Money Loop. After placing the GM in the plan, he walked away with $150,000 of that $250,000 tax-free—an extra $20,000 in take-home pay, while the club pays no more out of pocket and gains a long-term, recoverable asset. Here’s how we did it.

Our Challenge: California High Taxes, our GM’s Shrinking Take-Home  

• GM salary: $750,000/year  

• Tax bracket kicks in above $500,000 at 46%  

• Net from the extra $250,000: 54% × $250,000 = $130,000  

In California’s punitive tax environment, even a modest bonus or raise can be swallowed by withholding. Employers of high-paid executives face a similar headache: recruiting and retaining talent without spiking compensation costs or writing massive bonus checks.

Our Solution: The Endless Money Loop Deferred-Comp Plan  

Under the EML arrangement:  

1. The GM “elects” to defer the $250,000 that would otherwise hit payroll.  

2. The club channels those dollars into a corporate-owned life insurance policy on the GM—rather than treating the payment as immediate W-2 income.  

How It Works—Step by Step  

1. Election and Deferral  

• Instead of receiving the $250,000 as cash salary (taxed at 46%), the GM signs an election to defer it.  

• For the club, this remains part of total compensation but shifts from expense to balance-sheet asset.  

2. Life Insurance Funding  

• The club funds a permanent (whole-life or universal-life) policy with $250,000 each year.  

• Policy cash value grows tax-deferred under current IRS rules.  

3. Accessing Cash—Tax-Free Loans and Withdrawals  

• After a 90-day waiting period, the GM can access up to 60% of that year’s premium as a policy loan or withdrawal—tax-free.  

• On a $250,000 contribution, that equals $150,000 in immediate, tax-free cash.  

Financial Impact: GM vs. Status Quo  

• Without EML: $250,000 taxed at 46% = $130,000 take-home.  

• With EML: $150,000 tax-free withdrawal = net increase of $20,000.  

And because those dollars aren’t subject to state or federal withholding in the year of contribution, the GM enjoys a meaningful boost in liquidity without any change to the club’s nominal compensation package.

Employer Benefits: Expense becomes an Asset  

From the club’s perspective, the $250,000 annual contribution:  

• Remains part of total compensation but shifts from an immediate payroll expense to a long-term asset on the balance sheet.  

• Accumulates cash value inside the policy, which the club will recoup in full, plus any contractual interest—15 years down the road or upon the GM’s passing.  

• With the 5-year commitment, the club will recoup, $1.25M in 15 years tax free.  Can be helpful with future capital projects.

• Provides a powerful recruiting and retention tool without increasing short-term cash outlays.  

Conclusion  

By leveraging the EML Deferred-Comp Plan, our country club turned California’s punitive high-income taxes into an opportunity. Their GM receives more money in hand today, $150,000 instead of $130,000, while the club transforms a steep payroll burden into a recoverable, balance-sheet asset. It’s a textbook demonstration of how creative compensation structuring can create real win–win outcomes for both high-earning executives and their employers.

For a free consultation at mscully@baycrestconsultants.com - www.baycrestconsultants.com