Finding a way to motivate and retain executives may be solved by offering bonuses inside a Non-Qualified Plan. However, finding a vehicle to fund these bonuses can be challenging. Fortunately, Section 162 of the Internal Revenue Code may allow an employer to deduct certain expenses-including salary and other compensation that are ordinary and necessary business expenses. In its simplest form, an executive bonus plan is one in which an employer pays the premiums on a permanent life insurance policy owned by an employee or with certain carriers, can be owned by the company.
Using a Section 162 bonus plan may solve several finance challenges simultaneously including expensing excess profits, reducing potential tax liabilities, while helping retain key executives. The structure of these plans vary greatly and must be designed to meet your company’s unique needs.
If you’d like additional information about creating a plan for your business, please call All Seasons Wealth at 813-490-6610 today.
Any opinions are those of All Seasons Wealth and not necessarily those of RJFS or Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.