Employee benefits and retirement plan solutions Protect my employees Total Retirement Solutions Bonus plans

Bonus plans

Bonus plans

Reward the people who support your business.

Your most dedicated employees often put in extra hours to support your business. Reward and retain them—and the people they love—with bonus plans.

What are bonus plans?

Bonus plans let you reward and retain key employees with a bonus that generally funds a personally owned life insurance policy.1 The bonus can be tax-deductible for your business (subject to reasonable compensation restrictions). 2

  • Income may be accessed on a tax-advantaged basis.1
  • Survivor benefits may be distributed as a tax-free death benefit to the employee’s beneficiary.1


Explore your options.

It all starts with choosing the plan that fits your business type and overall goals. Principal® offers a variety of bonus plans for key employees and owners of C and S corporations, LLCs, and tax-exempt organizations.  

Talk to your financial professional to help you get started.


1 Multiple funding options are available.  Each option has varying tax implications. 

2 Business owners of flow-through entities (LLCs, S corporations, partnerships) are taxed pro rata on the dollars used to pay the premiums. These plans generally don’t provide an income tax advantage for owner employees. There may be some limited application for minority owner employees.
The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment, or tax advice. You should consult with appropriate counsel, financial professionals, and other advisors on all matters pertaining to legal, tax, investment, or accounting obligations and requirements.

Insurance products issued by Principal National Life Insurance Company (except in NY) and Principal Life Insurance Company®, and the members of the Preferred Product Network, Inc. Plan administrative services offered by Principal Life. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.