Executive Benefit Strategy
A Deductible Business Expense. A Growing Personal Asset.
Use a Section 162 bonus arrangement to build tax-advantaged wealth for key executives. A deductible business expense and a growing personal asset — at the same time.
How This Strategy Works
Fully Tax-Deductible
Under a Section 162 bonus arrangement, the premium paid to fund this strategy is a deductible business expense. The company reduces its taxable income while building a benefit for key executives.
Tax-Advantaged Executive Growth
The executive owns the policy and benefits from tax-advantaged growth. Distributions can be structured to supplement retirement income without the restrictions of a qualified plan.
A Retention Tool That Actually Works
Unlike cash bonuses that are spent, this benefit builds lasting personal wealth. Vesting schedules can be designed to reward loyalty and keep top talent committed to the organization.
Section 162 arrangements work for business owners who want to reward key people and for executives who want to build wealth beyond their employer plan.
Complimentary. No pressure. A clear path to your LivingLEGACY™.
FAQ
Common questions about executive benefit strategy.
What is a Section 162 Executive Bonus Plan?
A Section 162 plan uses a business-paid life insurance premium as a fully deductible business expense. The executive owns the policy and benefits from tax-advantaged cash value accumulation and tax-free distributions in retirement — a benefit that builds lasting personal wealth while rewarding loyalty.
Is the premium paid under a Section 162 plan taxable to the executive?
Yes — the premium is treated as taxable compensation to the executive. A "double bonus" arrangement can gross up the payment so the executive receives the policy benefit net of tax, with the company deducting both the premium and the gross-up amount.
What is non-qualified deferred compensation (NQDC)?
NQDC plans allow executives to defer a portion of income to a future date — typically retirement. Unlike qualified plans, there are no IRS contribution limits. The deferred amounts are taxed when received, allowing tax-advantaged accumulation in the interim without the restrictions of a 401(k).