Tax Facts
A—Executive Bonus Plan
An executive bonus plan, also known as an insured bonus plan or Section 162 plan, is a nonqualified plan that allows an employer to determine who will participate and how large the benefit will be, and also allows an income tax deduction for the plan contribution. The Section 162 plan can be an alternative to a qualified pension or profit-sharing plan, which some employers view as extremely complex and restrictive.
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