Executive Bonus Plans: A Strategic Employee Benefit Solution
What is an Executive Bonus Plan?
An executive bonus plan (Section 162 bonus plan) is a nonqualified employee benefit arrangement where an employer provides life insurance for selected employees. The employee owns a life insurance policy insuring their life and names a personal beneficiary, while the employer funds the policy premium by paying directly to the insurance company.
Plan Setup
The employer identifies key employees who will participate in the executive bonus plan.
Policy Ownership
The employee applies for and owns a life insurance policy on their own life, naming personal beneficiaries.
Premium Payment
The employer pays the premium directly to the insurance company as a bonus to the employee.
Tax Treatment
The premium payment is tax-deductible to the employer and taxable income to the employee.
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QUALIFIED RETIREMENT PLANS
Your Comprehensive Guide to Growing Your Business Through Tax-Advantaged Retirement Solutions The Solarus Insurance Agency Advanced Market's Team has developed this Producer Training Playbook to help you identify and capitalize on opportunities within the Qualified Retirement Plans market. This gui
Target Market for Executive Bonus Plans
Business Owners
Owners of closely-held businesses looking to provide selective benefits to key employees without the administrative burden of qualified plans.
Key Executives
High-value employees whose retention is critical to the company's success and who would benefit from additional life insurance coverage.
Professional Practices
Medical, legal, and accounting firms seeking to provide partners and associates with valuable benefits while maintaining simplicity.
Solarus Insurance Agency PLLC and their representatives do not offer tax or legal advice. Please encourage your clients to seek tax or legal advice from their appropriate professional advisor.