What Is an Executive Bonus Plan
Staffing a business can be challenging these days. The best candidates want the best benefits,
like valuable bonus plans. But small businesses can't always afford them. So,
it's tough to attract top talent unless you have something extra. Hi, I'm Jayna Thompson,
Advanced Markets Case Design Consultant. We help advisers and their business owner clients
understand how and when an executive bonus plan can be a competitive solution to attract,
reward, and retain top talent. Often referenced as section 162 plans, executive bonus plans are
easy to explain, easy to implement, and easy for small businesses to administer.
An executive bonus plan offers a simple way to provide extra benefits employees
appreciate contrasted with qualified plans that can be expensive to implement, fund,
and maintain. The employer funds a life insurance policy owned by the employee and reports the
premiums as additional compensation to the employee. The policy protects the employees
family with a generally income tax-free death benefit and access to supplemental income in
retirement by accessing the policy's cash value. It can even be set up so a company covers the
employees tax liability, too. That's a double bonus! The result, an attractive extra benefit
for valuable employees and a competitive benefit edge for employers. Plus, it's cost-effective,
funded by a flexible life policy with premium payments that are generally taxdeductible to
the employer. Simple, less complex than large corporate programs, and flexible,
allowing discretion to offer it to select staff. See how an executive bonus arrangement can help
create a competitive edge in the hiring process that candidates want and companies need. Learn
more about this and other BusinessPRO strategies by contacting your financial representative today.
