Low-Cost Investment – High Value Benefit for the Most Valued Employees
Chances are some of your clients’ key employees are being courted by competitors right now. It’s a tight labor market, and simply boosting salaries isn’t the answer. Executive Bonus Plans helps your clients retain essential individuals at a relatively low cost and with significant tax benefits.
The Advantage for Employers:
Help attract and retain top talent at a relatively low cost.
Bonuses given to employees to pay the whole life premium are tax deductible (the policy premium is taxable for the employee).
Clients may pay a “double bonus” – providing enough money to employees to pay both the premiums and taxes.
The employer may choose which executives will be given bonuses — and the amount of each bonus.
There is an income-tax free death benefit for the employee’s beneficiaries.
The employee retains ownership of policy cash values that grow tax deferred and can be used to supplement income in retirement.
Unlike a 401(k), there are no Internal Revenue Code contribution limits, and there’s no penalty for early surrenders or loans — provided the policy isn’t classified as a Modified Endowment Contract
“Golden Handcuffs”: outline the desired vesting period in a written employment contract.
The Benefits for the Most Important Employees:
Cash value on the whole life policy can be accessed at any time.
Upon retirement, the employee may use the cash value to supplement retirement.
The Basics of an Executive Bonus Plan:
A basic Executive Bonus plan is very simple. The executive purchases a life insurance policy on his/her life, and the employer pays the premium (with the “bonus”). The employer gets to deduct the bonus, and the employee pays the taxes on the bonus. The employee enjoys the full policy cash value and death benefit. In some cases, the employer even pays the taxes for the employee (through what is called a “double bonus”).
Navis Benefits Group, LLC, can help you design specialty benefit programs for your clients.
