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Help Strengthen the Stability of Your Business With an Executive Bonus Arrangement

Attracting and retaining key employees is important for small business owners like you to maintain a competitive edge. An executive bonus arrangement can help you attract the right type of employees and keep them with the company. 

While useful, employees typically spend traditional monetary bonuses on bills or other routine things that do not create much of an impression on the employee. An executive bonus arrangement (also known as Section 162 Plans, referring to the Internal Revenue Code section that outlines the ability to offer executive bonus benefits), however, are easy to implement and administer and can provide great benefits to both the business and the employee. 
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Attract & Retain Your Most Valuable Employees

Through an executive bonus arrangement funded through a Lafayette Life insurance policy, you and your financial representative can find meaningful compensation incentive plans that are generally income tax deductible for your business. If your star employee lives a long life, the cash value of the life insurance policy can help supplement their retirement income. 

With these plans, you pay a bonus to your key employee(s) in the form of a premium payment you make on a Lafayette Life whole life policy of which the employee is both the insured and policy owner. In addition to helping keep the right employees to ensure the continued success of your business, there is no maximum or minimum participation requirement so you can choose which employees receive the benefit and you can terminate the arrangement without having to notify the IRS like certain other incentive approaches.
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Create a Custom Solution

Executive bonus arrangements can generally be customized to meet the employee’s individual needs and offer additional family protection at a low cost. The employer pays the premium payment, which is considered taxable income to the employee, but he/she owns the policy and has access to the cash value and the ability to designate beneficiaries. Cash values accumulate tax deferred and can be used to supplement their retirement income needs. 

To help the employee pay the extra income tax liability, you can pay an extra bonus amount, called a Double Bonus Arrangement, to cover all or part of the associated tax liability.
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What You Need to Know About Executive Bonus Arrangements

Read through our information guide to get all the details about executive bonus arrangements. 

Executive Bonus Arrangements Guide (PDF)
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Let’s Team Up for Success

You and Lafayette Life could be a winning combination together. Whether you are ready to become a Financial Representative or would like to learn more about partnering with Lafayette Life, we are eager to hear from you. 
IMPORTANT DISCLOSURES

The Lafayette Life Insurance Company does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Lafayette Life cannot guarantee that the information herein is accurate, complete or timely. Lafayette Life makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Please consult an attorney or tax professional regarding your specific situation.

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