An Executive Bonus plan using life insurance can provide a simple yet powerful retention fringe benefit for business owners and key employees. Another advantage is the business may be able to take a current tax deduction for the bonus paid in the executive bonus plan.
The business pays a tax-deductible bonus to fund premiums for a life insurance policy personally owned by the business owner.The business owner designates a beneficiary for the death benefit. The business owner may have access to policy cash values on a tax-favored basis to address personal needs such as supplemental retirement income.
*The business owner employee pays income tax on the bonus received. At death, the business owner’s beneficiary receives the death benefit proceeds, generally income tax-free.
162 Executive Bonus Plans
MKG Insurance Agency CA License No. 0J03013
Florida Department of Insurance License No. W383809
New Mexico Partnership Corporation License No. 100014763
Texas Department of Insurance License No. 2126837
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