Myerson Wealth

 

 A (Section 162) Executive Bonus Plan is designed for Employers to provide additional benefits to key Employees on a selective basis. The major difference between the preceding plans and a Sec 162 Plan is that in the case of the latter, the Company can take an immediate tax deduction for the benefit provided to the Employee. Conversely, the Employee is taxed on that benefit in the year the contribution is made by the Company.

The mechanics of a Sec. 162 Plan are relatively simple:

Advantages of Executive Bonus Plans

To the Company:

To the Executive:

Disadvantages of Executive Bonus Plans

To the Company:

To the Executive: Without a “double bonus” arrangement, there is a taxable cost to the Employee.

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