What is a Section 162 Executive Bonus Plan?

An executive bonus plan (Section 162) is a way for business owners or companies to provide additional supplemental benefits to key employees or executives of their choice. The benefits usually include life insurance policy death benefits as well as cash value accumulations that can be used as a retirement income supplement.  With an executive bonus plan, the business can use tax deductible company funds to selectively provide valued benefits to key people.  An executive benefit plan, used effectively, can be a valuable tool to attract and retain key executives. 

Benefits for the Employee

• Death Benefit protection

• Attractive compensation package

• Cash value of the policy is tax-deferred

• Build a generally tax free retirement income stream

• Employee retains control of the policy as the owner

Benefits for the Business

• Incentivizes employee retention with attractive benefit

• Premiums paid by the business are tax deductible

• Can be offered to select employees

• No IRS approval required

• Easy to implement and administer