Executive Bonus A plan to help recruit, retain and reward key employees GenAmerica Financial 700 Market Street St. Louis, MO 63101

Executive Bonus What Is An Executive Bonus Plan? A nonqualified benefit plan Assists key employees (including business owners) in providing for their financial security through personal life insurance Employer pays a bonus in cash or as a premium on the life insurance policy

Executive Bonus Life Insurance Adds To The Key Employee’s Financial Security A benefit to protect their family’s financial future in the event of death Income tax-deferred cash value can help meet their family’s major life expenses and provide additional retirement income

Executive Bonus Advantages To The Key Employees? Significant life insurance benefits at a reduced cost. The out of pocket cost is only the tax due on the bonus ($10,000 taxed at 27% = out of pocket cost of $2700) Additional retirement income The life insurance policy is a valuable asset which the employee owns Gives employees recognition

Executive Bonus What Are The Advantages To Your Company? Helps to reward and retain key employees You select the participants Plan contributions are normally income tax deductible to your company(IRC 162) Administrative costs are minimal

Executive Bonus How Does The Plan Work? You choose the employees who will participate. You can include yourself Your company authorizes the plan with a corporate resolution The key employees (including business owners) apply for needed life insurance and name beneficiaries

Executive Bonus How Does The Plan Work? Your company either pays the insurance premium directly or pays a bonus to the employee The employee reports this payment as taxable income Your company deducts the payment as employee compensation

Executive Bonus How Does The Plan Work? The policy provides income tax free life insurance benefits to the beneficiaries Your key employee has access to policy cash values (can be restricted by written agreement) At retirement the employee can use the cash values to supplement retirement income

Executive Bonus ERISA Requirements An executive bonus arrangement is not subject to ERISA reporting and disclosure requirements if it provides benefits only for a select group of key employees

Executive Bonus Restricted Access Option By written agreement, the employee’s access to cash value may be restricted until a certain date such as retirement or termination This “golden handcuff” encourages the employee to remain with your company

Executive Bonus In Conclusion An Executive Bonus Plan Can... Provide a significant benefit for key employees including yourself Offer tax advantages to both your company and key employees Provide a cost effective solution to numerous financial needs