Interactive Tool

What Could Your Retirement Test

Adjust salary, premium, and brackets to model employer deductions and executive IUL accumulation. All projections are estimates—PWR provides full carrier illustrations.

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Double Bonus Structure

Adds a second bonus to cover the executive's income tax on the first bonus — so the executive pays zero out of pocket. The company deducts both bonuses. Toggle on to see the gross-up calculation and revised net cost.

Annual Employer Deduction
$10,800
Federal tax saved by company
Employer Net Cost / Year
$25,200
After-deduction company outlay
IUL Cash Value — Year 20
$901K
Tax-deferred accumulation
Tax-Free Income — Year 20
$36,021/yr
Policy loan retirement income
20-Year Company Deductions
$216K
Total corp tax savings, 20 yrs

Employer Cost Analysis

§162 Deduction
Cost vs. Pure Salary Increase
Equiv. salary increase cost $36,000
Section 162 net cost $25,200

$10,800 more value delivered at the same cost as raising salary by $25,200

Executive IUL Accumulation

Tax-Free Growth
20-Year IUL Cash Value Projection (vs Taxable Investing)
IUL (tax-free) — $901K at Year 20
Taxable account — $717K at Year 20
Year 10
$333K
Cash Value
$13,301
Tax-Free/yr
Year 20
$901K
Cash Value
$36,021
Tax-Free/yr
Year 30
$1871K
Cash Value
$74,830
Tax-Free/yr
IUL vs Taxable Account — Year 20 Advantage

$184K more in the IUL at Year 20 — from tax-deferred compounding + zero market loss protection

Plan Summary:

The company pays $36,000/year gross bonus — deducting $10,800 annually. Net employer cost: $25,200/year. The executive builds a tax-free IUL projected at $901K in Year 20, generating $36,021/year in tax-free retirement income.

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Plan Designer projections use simplified assumptions: IUL net crediting rate of 5.5%, federal tax brackets only (state taxes not included), and no charges other than standard mortality and expense costs. Actual IUL performance depends on index crediting, policy charges, carrier, and premium payment consistency. Tax deductibility requires that compensation be reasonable under IRC §162. Always coordinate with a licensed CPA and corporate attorney before implementing any executive compensation plan.
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