What is an Executive Bonus Plan?
An Executive Bonus Plan is a popular method that employers use to provide additional bonuses & benefits to key employees. These plans are often funded with Universal Life policies, due to the premium flexibility, and very simple to implement!
Benefits to the employee
These plans are great for key employees because they provide immediate survivorship benefits to the employee’s family, and cash value the employee can access without penalty¹. If the employee chooses, they can use this plan as a retirement vehicle and take the plan with them even if they leave the company. Finally, if the employee decides to keep the plan as a retirement vehicle, there are no contribution limitations that would usually follow a qualified retirement plan.
Benefits to the employer
Executive Bonus Plans are generally tax deductible as ordinary business expenses. This is a great cost-effective way to attract and retain high performing employees. In addition, when these plans use universal life policies as a funding method, premiums become flexible, and an employer can choose to pay more or less year to year.
To learn about how you can implement an executive bonus plan within your workplace, please visit our Scheduling Page to discuss your needs in person.