EXECUTIVE BONUS PLANS
Turn Business Dollars into Tax-Free Wealth and Retirement Income
Executive Bonus Plans are attractive because they offer flexibility without IRS approval or complex rules. You can choose who participates, reward them with tax-deductible bonuses, and create loyalty with a simple, easy-to-administer benefit. Executives, in turn, own their life insurance policy, grow its cash value tax-deferred, and receive TAX-FREE benefits during life and at death.
Benefits for Corporations
An Executive Bonus Plan is a powerful, flexible way to reward your top talent while also benefiting your business. It allows you to purchase life insurance for yourself and key employees, using company-paid bonuses. These policies build cash value tax-deferred and can be used to provide retirement income, estate liquidity, college funding, and death benefit protection.
What is an Executive Bonus Plan?
How to Begin
Getting started is simple. Identify the executives you want to reward, gather basic information (like age, coverage needs, and tax brackets), and put a written agreement in place. With Section 162 of the IRS Code allowing full deductibility of the bonuses, an Executive Bonus Plan gives you a smart, tax-efficient way to recruit, retain, and reward your most valuable people.
Plan Design Options
There are several variations of Executive Bonus Plans. A Double Bonus covers both the premium and the taxes due, so the executive owes nothing out of pocket. An Executive Contribution design lets the executive supplement the premium with their own funds. The Custodial Executive Bonus Plan gives the employer control over policy access until certain conditions are met—helpful for retaining talent and protecting the business.
