Executive Bonus Plan

An executive bonus plan consist of benefits that company owners and businesses provide to key personnel.


The EBP can provide these benefits by using tax-deductible reserves, and is generally a deductible business expense for the company


The EPB is an important strategy to attract the right talent and retain the best people



These benefits include ;


1. The ability to supplement retirement income

2. Purchase Whole life insurance

3. Purchase Universal Life which accumulates a cash value that is allowed to grow on a tax-deferred basis



Advantages of Executive Bonus Plans:

. Simple to implement

. Easy to manage

. Considered a fully deductible expense to the company

. Executive bonus plans are not subject to "qualified plan limits"

. Key executive has complete control in naming their beneficiary

. Key executive has immediate access to policy cash value without income tax through policy loans and withdrawals, unless there is a "restricted or controlled executive bonus"