Executive Bonus Plan (Sec. 162 Bonus Plan)

[jmc]

Does anyone know if Executive Bonus Plan payment is subject to SS Tax in addition to income tax? Someone says that employees pay only income tax. I could not find answers from Pub. 15-B or Taxable Fringe Benefit Guide. Where can I find document for SS Taxability for Fringe Benefits?

[OldJack]

An executive bonus plan is a non qualified plan meaning that it is not deductible from corporate taxes until paid by the corporation and when distributed or paid to the executive it is subject to payroll taxes and reporting on a W2. Non qualified plans are discussed in TheTaxBook on page 13-22.

edit: To further clarify, if the plan on the corp books is unfunded (just a liability) then there is no deduction to the corp and not taxable income to the employee. If the plan is funded contributions to the fund are deductible by the corporation and taxable to the employee unless forfeiture risks exist. When the employee receives the bonus it is just regular payroll check subject to all withholdings and with the liability account adjusted accordingly.

[jmc]

Employer-provided Pension?

When Executive Bonus Plan is a non-qualified employee benefit, is it not regarded as a Employer-provided pension plan for IRA deduction purposes? In other words, can the executive deduct IRA contribution on 1040?