Advanced Underwriting Consultants

Question of the Day – May 11

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: My client is implementing an executive bonus plan for a key executive.  Is it too late to make a contribution for last year?

Answer: Yes.

A bonus plan creates a business deduction for the company—and taxable income for the participating executive—in the year it is paid.  Unlike certain pension plans—such as SEP IRAs—there is no grace period for bonus contributions that extends into the next year.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.