How Much Are You Leaving on the Table Every Year?
Most business owners overpay taxes every year, not because the tax code requires it, but because no one showed them a better structure. See your estimated annual tax exposure and how a Section 162 Executive Bonus Plan redirects those dollars into a tax-free retirement account.
See My NumbersSection 162 allows businesses to deduct compensation paid to owner-employees, including premiums on a tax-free retirement account. Most business owners have never used it.
Under a Section 162 plan, the business funds the owner's 7702 account with pre-tax dollars. The business deducts it. The account grows with a floor and is accessed tax-free in retirement.
Unlike a 401(k), there is no IRS limit on how much you can put into a 7702 account. The more business income you have, the more you can redirect away from taxes.
Your Business Profile
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Section 162 Plan Assumptions
Set the annual bonus amount and projection window. The 7702 account grows at the rate you set below.
Your Estimated Numbers
Why Business Owners Use a Section 162 Plan Instead of a 401(k)
| Feature | 401(k) | Section 162 + 7702 Account |
|---|---|---|
| Annual contribution limit | $23,000 (2024, employee only) | No government cap |
| Tax on withdrawals in retirement | Taxed as ordinary income | Tax-free access |
| Market loss protection | Balance can drop | Floor holds at zero |
| Required withdrawals at 73 | Yes, Required Minimum Distributions | None required |
| Death benefit for your family | Account balance, taxable to heirs | Included, generally income-tax-free |
| Business deduction | Employer match only | Full bonus amount is deductible |
Common Questions
What is a Section 162 Executive Bonus Plan?
Section 162 of the tax code allows a business to deduct compensation paid to owner-employees, including premiums paid on a life insurance policy structured as a bonus. The business gets a deduction. The owner builds a tax-free 7702 account funded with pre-tax business dollars. It is one of the most efficient retirement strategies available to business owners.
What is a 7702 account?
A 7702 account is a tax-free retirement account named after Section 7702 of the tax code, the same way the 401(k) is named after its own section. It grows with a floor that protects against market losses, and withdrawals in retirement are accessed tax-free. There is no government cap on how much you can fund.
Is this an S-Corp vs. sole proprietorship comparison?
No. The Section 162 plan works across entity types. A separate calculator on this page covers the S-Corp election savings question specifically. This tool focuses on how any business owner can redirect a portion of taxable business income into a tax-free 7702 account using a Section 162 Executive Bonus Plan.
Are these results a guarantee?
No. This is an educational estimate, not a prediction or financial advice. Your actual results depend on your specific tax situation, business structure, and the carrier illustration reviewed with a King Legacy Group advisor.
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Build Your Tax-Free Retirement With Business Dollars
This estimate is a starting point. Your actual Section 162 plan is designed around your business income, entity structure, and retirement goals, then confirmed with a carrier illustration. Schedule a complimentary strategy review with King Legacy Group and see your LivingLEGACY™ Designed.
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Important. This calculator is for educational purposes only. It is a simplified estimate and does not constitute financial, tax, or legal advice. Tax figures are approximations based on federal rates only and do not include state income taxes, deductions, credits, alternative minimum tax, or other factors that affect your actual liability. Section 162 plan design, funding limits, and tax treatment depend on your specific business structure, compensation arrangements, and applicable law. Results for a 7702 account are illustrative and your actual numbers come from a carrier illustration reviewed with a qualified advisor. Consult a qualified tax and financial professional regarding your situation.