Assuming that the plan covers only one or two stockholders or top management executives, installation of Section 162 plan requirements is quite simple. There should be a corporate resolution by the company’s board of directors adopted in writing before the agreement with the employee is signed. The resolution should specify the corporate objectives to be met and the general terms of the Section 162 plan.
A separate contract with the employee should state that the corporation is making a special benefit available to the employee in return for his or her past and continued services and will provide that benefit as a bonus over and above all other compensation. The agreement should retain for the employer the right to terminate the plan at any time and for any reason. The agreement should also list the amount of the death benefit, the type of policy to be purchased, and the terms upon which the employee will cease to be eligible for the benefit.
Read an overview of Section 162 Plans Requirements here.
View Lifequotes wide array of policies.
Reproduced with permission. Copyright The National Underwriter Co. Division of ALM