SUBSCRIBE
Enter your Name and Email address to get
the newsletter delivered to your inbox.
Please include name of person that directed you to my online newsletter so I can thank them personally.
Beth A. Botti, CFP®, ChFC, CLU, CDFA™
Financial Consultant
California Insurance License #0G24537
612 Wheelers Farms Road, Milford, CT 06460
Phone: 203-877-6556 Ext. 169
Fax: 203-301-0736
Email: beth.botti@equitable.com
May/June 2022
Executive Bonus: A Perk to Consider
Staffing issues. Stress. Burned-out managers. If the “Great Resignation” has prevented your business from attracting and retaining key employees, a Section 162 Executive Bonus Plan might be an incentive program worth considering.
With an executive bonus plan, your business provides a benefit—typically life or disability insurance—to key executives to motivate them to join or stay with the company. Premiums are either paid through cash bonuses or made directly to the insurance company and reported as income on the employee’s W-2. Under a cash bonus arrangement, the bonus received by the key employee is usually equal to the cost of the policy premiums and the associated taxes on the income. Thus, the employee incurs no out-of-pocket expense.
Benefits for You
You don’t have to offer the plan to all key employees. You can choose which key executives will receive the incentive. You also have the flexibility to offer plans with different terms and benefits for individual employees. The plan is easy to implement and administer and doesn’t require IRS approval. Your company can take a tax deduction for the bonus payments if they’re considered “reasonable compensation.”Benefits for a Key Employee
An executive bonus plan provides life insurance coverage to the employee. Generally, the employee retains ownership of the policy, names the beneficiaries, and has access to the policy’s cash value. Beneficiaries will eventually receive the policy proceeds income-tax free.Maintaining Control
Your company can ensure that a key employee remains with the company for a certain period by implementing a restricted executive bonus arrangement. This option allows the company to retain control over the policy’s cash value until the employee meets a goal that’s defined by the company. The goal might be the executive’s retirement or a specified number of years that he or she must remain with the company. The cash value becomes available to the employee after the goal is met.Get It in Writing
Although a written plan isn’t required, it can help your company avoid problems, such as having its tax deduction disallowed by the IRS.GE-4117253.1(1/22)(Exp.1/24)
CONTACT US
Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.
Duly registered and licensed financial professionals offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA,SIPC (Equitable Financial Advisors in MI & TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of Utah, LLC in UT; Equitable Network of Puerto Rico, Inc.). Equal Opportunity Employer - M/F/D/V. Equitable Advisors and its associates and affiliates do not provide tax, accounting, or legal advice or services. Representatives may transact business, which includes offering products and services and/or responding to inquiries, only in state(s) in which they are properly registered and/or licensed. Your connection to this website does not necessarily indicate that the sender is able to transact business in your state. The information in this website is not investment or securities advice and does not constitute an offer. For more information about Equitable Advisors, LLC you may visit https://equitable.com/crs to review the firm's Relationship Summary for Retail Investors and General Conflicts of Interest Disclosure.
GE-6572038.1 (4/24)(Exp. 4/26)
CFP®, and CERTIFIED FINANCIAL PLANNER™ are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board's initial and ongoing certification requirements.
www.equitable.com
Check the background of this investment professional on FINRA's BrokerCheck
Equitable Advisors, LLC and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.
The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.