Executive Bonus Plan

 

Executive Bonus Plans can be an effective way to reward selected employees or owners while providing tax deductions for employers. Using an Executive Bonus Plan, companies can provide their key executives or owners growing cash values in the form of company-paid cash-value accumulation insurance policies.

 

Implementing this strategy is simple, since the plan is easy to administer and exempt from annual reporting and ERISA requirements.

 

The Benefits of an Executive Bonus Plan:

 

The employer

• Distinguishes its compensation package

• Provides selected employees with attractive pre- and post-retirement benefits

• Generally receives income tax deduction for executive bonus payments

• Experiences less hassle since the plan is easy to communicate and maintain
   

The executive

• Enjoys tax-deferred growth of life insurance policy cash value

• Provides income tax–free death benefit protection for named beneficiaries

• Owns the policy and has access to an additional source of income to help meet financial goals

• Can save more for retirement, since the plan overcomes government limits