vested commissions

  • A common provision of agents’ contracts provides for a vesting of renewal commissions at specified rates. Ten percent of renewal premiums for two years and two percent thereafter for ten years on an ordinary life policy would not be uncommon, whether or not the agent remains with the company or insurer. In evaluating the realizability of agent’s balances, this provision must be considered.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).