One way to attract, reward and retain top employees is through the use of an executive bonus plan.
An executive bonus plan is a flexible and discretionary plan that can be a simple and cost-effective way to provide a tax-deductible benefit to a key employee. It is a basic arrangement where the employer makes the premium payments for a life insurance contract owned by the employee. The bonus is usually tax-deductible for the business and is taxable to the employee as ordinary income.
Potential advantages for the employer:
- The employer selects which employees will be eligible to receive the bonus.
- The employer determines the amount of the bonus for each eligible employee.
- The employer receives a tax deduction equal to the amount of the bonus.
Potential advantages for the employee:
- The employee owns the contract and can name the beneficiaries.
- Liquid cash is available upon the employee’s death and life insurance death benefits are usually received income tax-free.
- Any available cash values are accessible through loans and/or withdrawals.
For more information on how an executive bonus plan can help you, please talk to a Modern Woodmen representative.
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Universal life insurance
Universal life insurance is a kind of permanent life insurance coverage that provides flexible protection and cash accumulation that you can adjust as your needs change.