The Trials and Tribulations of 831(b)s

By Sandra Springer August 31st, 2018

Against a backdrop of legal battles and regulatory changes, small captives have been through a lot. But how much has the landscape changed, and are 831(b)s still an attractive option for the middle market? US Captive investigates.

Excerpt: Captives that make the 831(b) election—also known as micro captives or enterprise risk captives (ERCs)—have long been a cost-effective method for smaller and medium-sized companies to get involved in alternative risk financing.

The sector has gone through a series of changes over the last few years, for example, the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) increased the maximum annual premium limitation for 831(b)s from $1.2 million to $2.2 million (effective January 1, 2017) with a provision for inflation adjustments in future years ($2.2 million to $2.3 million for the 2018 tax year).

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