Executive Bonus Plans
A Restricted Bonus Plan -- also known as a Section 162 Plan or Executive Bonus Plan -- is an agreement between the organization and its’ highly compensated employees to provide supplemental income and a death benefit. The plan can be funded with cash value life insurance purchased by the organization for your key employees.
The employee applies for and owns the life insurance policy and the employee has the right to designate the beneficiary (ies) of the policy. The company pays the "bonus" premium directly to the insurance company. The employee's right to receive the cash value of the policy through loans, withdrawals or surrender is subject to a vesting schedule based on age, years of service or other conditions agreed upon by the company and the employee. If the employee terminates employment prior to becoming fully vested, the company is repaid some or all of its "bonus" premiums from the policy's cash value.
A Restricted Bonus Plan -- also known as a Section 162 Plan or Executive Bonus Plan -- is an agreement between the organization and its’ highly compensated employees to provide supplemental income and a death benefit. The plan can be funded with cash value life insurance purchased by the organization for your key employees.
The employee applies for and owns the life insurance policy and the employee has the right to designate the beneficiary (ies) of the policy. The company pays the "bonus" premium directly to the insurance company. The employee's right to receive the cash value of the policy through loans, withdrawals or surrender is subject to a vesting schedule based on age, years of service or other conditions agreed upon by the company and the employee. If the employee terminates employment prior to becoming fully vested, the company is repaid some or all of its "bonus" premiums from the policy's cash value.
Executive Bonus Plans
