Executive Bonus Plans What They Are and How To Sell Them

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Executive BonusPlans What They Are and How To
Sell Them
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What is Executive Bonus?

• A non-- qualified employee benefit plan, that
  permits the employer to pay a bonus either in
  cash or as a premium on a life insurance contract
• Such a plan is designed to increase retention of
  key employees on a tax preferred basis

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How Does it Work?

• Employer pays bonus to Employee
• Employee applies for insurance contract
• Employer pays cash bonus to employee
• OR
• Employer makes premium payment to insurance
  company

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Reasons to choose the Executive Bonus Plan

• Flexibility and discriminatory application
• To recruit and retain key employees
• Cost effective
• Few, if any ERISA or IRS reporting or approval
  requirements
• No formal administration service

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When to Use a Bonus Plan

• To provide the executive with a pre and post
  retirement benefit
• To provide the executive with retirement income
• When assisting the executive in funding a
  business succession agreement
• To provide the executives estate with a source
  of liquid assets

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Executive Bonus Income Taxation

• Employer
• Premium is deductible to employer under IRC 162
• Deduction is immediate

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Employer Benefits

• It helps recruit employees
• It rewards only deserving employees
• It provides a tax-deductible alternative to other
  types of non-qualified plans
• It saves costly administrative expenses
• It is easy to understand

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Executive Bonus Income Taxation

• Employee
• Bonus included on employee W-2
• Employee recognition of income under IRC 61

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Employee Benefits

• The Employee owns the insurance
• Even upon employment termination
• Each plan can be personalized to meet specific
  needs
• Additional Employee tax can be covered by an
  additional bonus

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Restricted Access Plans

• Limited Employee access to policy cash values
• Cash values can not be borrowed, assigned or
  surrendered
• Restriction can be removed by Employer at any
  time
• Increases likelihood of employee retention
• Doesnt effect deductibility of premium

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Executive Bonus

• But how do I find them?
• When I find them how do I differentiate myself?

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What to Expect

• Prospecting technique
• Setting yourself apart
• One way to find the money

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Prospecting

• Most any systematic approach works!
• May we never forget
• Work hard
• Work smart
• Our business is like a flower, either it
  continues to grow, or it dies
• When you are in a slump, review the basics

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Prospecting

• Cross referencing Utilize what you have
• Create cross reference database in excel or any
  other database of your choice
• Dun Bradstreet
• Harris County Business Extension
• Preparation
• Run query and print

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Prospecting

• Cross referencing Utilize what you have
• Create cross reference database in excel or any
  other database of your choice
• Dun Bradstreet
• Harris County Business Extension
• Preparation
• Run query and print

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Setting Yourself Apart

• Presentation
• Publishing Promoting
• Document Retrieval

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Setting Yourself Apart

• Presentation
• Capture picture(s) of prospect
• Digital camera
• Website
• Company Brochure
• Convert image
• Save as background

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Altair Strickland, Inc.
Business Succession Planning
Empowering the Entrepreneurial Spirit
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Setting Yourself Apart

• Publishing Promoting
• Promote the program
• Utilize what you have
• Customize within a template

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Setting Yourself Apart

• Document Retrieval
• He who holds the information maintains control of
  the client
• Documents we hold

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Set Up an easy Close

• Discover as usual
• Review Balance Sheet
• Concentrate on Install Debt
• Discuss term conversion at time debt is retired