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Dianne Williams Wildt, MBA
Certified Retirement Counselor®
Since 1983 in the financial services and investment industry
Retirement Pathways, Inc.
4500 Bowling Blvd., Suite 100
Louisville, KY 40207
Phone: 502-797-1258
Email: dianne@retirementpathways.com
Website: www.retirementpathways.com
When you want to reward executives with a bonus but don’t have the cash flow to do it, executive bonus arrangements funded by life insurance may be an efficient option. Also known as Internal Revenue Code (IRC) Section 162 plans, executive bonus arrangements are typically additional compensation – or bonuses – given to executives and other key employees.
Executive bonus plans may give business owners the ability to deduct premium payments as a business expense. However, the business cannot recover expenses from the death benefit, because the insured owns the policy and names the beneficiary.
Because there is some flexibility in how cash value and loans are handled, business owners may restrict key executives from taking cash value or loans from the policy for a period of time. This approach can provide an incentive for key employees to remain with the company. Conversely, key employees may have access to cash value and loans throughout the life of the agreement.
However, business owners that use Section 162 plans appreciate their ability to help attract and retain key employees and their ease of administration compared to qualified plans.
Consult you financial and tax professionals to learn more.
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Investment advisory services offered through American Capital Management, Inc., a State Registered Investment Advisor. Retirement Pathways, Inc. is independent of American Capital Management, Inc.
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