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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Whole life insurance
Whole life insurance helps protect your loved ones, providing tax-free money when you die, not just if you die during a specified time period. You can get peace of mind, knowing that your family is protected, and you can take advantage of cash value and other living benefits to help you plan ahead – no matter what life brings.