Executive bonus plans

Retain top talent and reward key executives with tax-efficient compensation strategies

What an executive bonus plan does

An executive bonus plan ties life insurance to compensation, letting your company fund a death benefit while the executive receives a tax-deductible bonus. It's straightforward, flexible, and built for retention.

Learn more
Arrow
Why

Three reasons to consider this

Executives stay when they know you value them

Attract and retain top talent

Your bonus is deductible. The death benefit is tax-free. The math works.

Arrow

Tax-advantaged compensation

Adjust amounts, add participants, or change structure as your business grows.

Arrow

Flexible plan design

Works for startups, mid-market firms, and established companies alike.

Arrow
Process

Building an executive bonus plan happens in stages. We handle the design, your company funds the insurance, and the executive receives the benefit.

Design the plan

We determine who participates, bonus amounts, and death benefit levels based on your goals.

Fund the insurance

Your company pays the premium each year and deducts it as a business expense.

Executive receives bonus

The executive gets a taxable bonus to cover their tax obligation on the death benefit.

Death benefit protection

If the executive passes, your company receives the tax-free death benefit as planned.

Get started

Arrow
Button

Questions

Everything you need to know about executive bonus plan design

Who qualifies for this?

Any key employee or executive your company wants to retain can participate. There's no limit on who you choose to include, and you control the bonus amounts and timing each year.

How does the tax treatment work?

The bonus is a deductible business expense for your company. The executive pays ordinary income tax on the bonus, but the life insurance death benefit passes tax-free to your business or designated beneficiary.

Can we change it later?

Yes. Executive bonus plans are flexible by design. You can adjust bonus amounts, add or remove participants, or modify the structure as your business evolves.

What happens if someone leaves?

The policy stays with your company. You own the death benefit and cash value. If the executive departs, you retain the insurance protection and accumulated value.

How much does this cost?

Costs depend on the executive's age, health, and the death benefit amount. We run illustrations showing the true cost after tax deductions so you see the real impact on your bottom line.

Can we use this for retention?

That's the primary purpose. The promise of a bonus tied to life insurance creates a powerful incentive for key people to stay. It's retention and protection in one strategy.

Need more clarity?

Our advisors can walk through your specific situation

Contact

Design your retention strategy

Let's build an executive bonus plan that works for your business

ScheduleQuote
Atlas Ridge
25.96°N 80.14°W · Aventura FLGet a quote
Executive bonus plans

Reward the people who carry the company.

A Section 162 executive bonus plan lets your business fund a life insurance policy your key employee personally owns, a tax-advantaged benefit that rewards the talent you most want to keep. A licensed Atlas Ridge advisor compares 25+ top-rated carriers to structure it around your goals.

Book a consultation→Get a quote
Coverage

What an executive bonus plan actually is

Golden handcuffs that feel like a gift, not a leash.

In a Section 162 executive bonus plan, your business pays a bonus that funds a permanent life insurance policy owned personally by a key employee. The bonus is generally deductible to the employer as reasonable compensation, and the employee owns the policy outright, including its cash value and death benefit. It is a clean, flexible way to single out top talent without the cost and paperwork of a qualified retirement plan. Because this is education and not tax advice, a licensed Atlas Ridge advisor works alongside your CPA to map the structure to your situation.

How it works

Three ways a Section 162 plan earns its keep

Simple to run, selective by design, and owned by the person you are trying to keep.

01 . SELECTIVE

Pick and choose

Unlike a qualified plan, you decide exactly who participates and for how much, rewarding one key employee or a short list without covering everyone on payroll.

02 . SIMPLE

Light on paperwork

There is no IRS approval process and minimal ongoing administration. The plan rests on a straightforward bonus agreement rather than the filings a 401(k) demands.

03 . PORTABLE

Employee-owned value

The key employee owns the policy from day one, so it builds cash value they can access and carries a death benefit that protects their family whether they stay or move on.

Why Atlas Ridge

Keep your best people without a leash.

A well-built executive bonus plan turns a valued employee into a hard-to-replace one, rewarding them today while giving them coverage and cash value that lasts. Atlas Ridge helps you design it right the first time.

Get a quote→
Why it matters

What a Section 162 plan does for both sides

01 . RETENTION

Keeps key talent

A meaningful, personally owned benefit gives your top performers a concrete reason to stay and grow with the company.

02 . TAX

Employer deduction

The bonus is generally deductible to the business as reasonable compensation, so the reward and the write-off arrive together.

03 . PROTECTION

Family security

The policy carries a life insurance death benefit that protects the key employee's family, independent of their tenure at your firm.

04 . GROWTH

Cash value access

Permanent coverage builds cash value the employee can draw on later, adding a savings dimension to the benefit.

Common questions

Executive bonus plan FAQs

Is the bonus tax-deductible for my business?

Generally yes. The bonus paid to fund the policy is treated as reasonable compensation, which is typically deductible to the employer. The employee reports the bonus as taxable income. Because outcomes depend on your specifics, a licensed Atlas Ridge advisor coordinates with your CPA before anything is finalized.

Who owns the life insurance policy?

The key employee owns it personally from the start. That means the cash value and death benefit belong to them, and the policy is portable if they later leave. Some employers add a vesting arrangement, sometimes called a restrictive bonus plan, to encourage the employee to stay a set number of years.

How is this different from a 401(k) or other qualified plan?

A Section 162 plan is nonqualified, so you are not required to offer it to all employees or clear IRS nondiscrimination and approval hurdles. You choose who participates and how much they receive, with far less administration. That selectivity is the whole point when you want to reward specific key people.

How many employees do I need to set one up?

There is no minimum. Executive bonus plans work for a single owner-employee or for a handful of key people, which makes them a fit for small and midsize businesses. A licensed Atlas Ridge advisor will look at your situation and compare carriers to see whether it makes sense.

Get your bearings

Know where your key people stand

Book a free, no-pressure consultation and a licensed Atlas Ridge advisor will map an executive bonus plan to your business, comparing 25+ top-rated carriers to find the right fit.

Book a consultation→Get a quote