By Paul Morrone CFP®, CPA/PFS, MSA
Compensation comes in many forms, but the most common form is cash. Many employees are used to getting an annual salary and a periodic bonus, which makes tax and financial planning easier, at least from a cash flow management standpoint. Those who receive significant bonuses, however, are faced with different challenges as variable compensation (commissions, bonuses, etc.) is generally not guaranteed and can vary greatly from period to period. The ambiguity around the timing and amount of future bonuses, especially for highly compensated employees and executives, creates planning challenges for those who have compensation packages heavily influenced by future unknowns.