Executive Benefits

Key Challenges for Businesses

For key executives, professionals and business owners, accumulating retirement wealth has increasingly become an individual responsibility and less of a corporate benefit.

If you are highly compensated your ability to save for retirement is impeded by:

  • restrictions on your participation in qualified savings plans
  • potential taxation of Social Security benefits
  • continued losses or cutbacks of employer paid benefit plans
  • the time, energy and effort needed to manage personal savings

These factors may limit the amount of retirement assets you will be able to accumulate.

Large public companies can afford the benefit costs and manage the complexity of tax, legal and accounting advice needed to develop supplemental programs to attract, retain, and reward their key people.  However, smaller corporations and businesses must ask themselves:

How Can I Compete?

Small to mid-size corporations must develop cost effective solutions to help their key talent grow and protect their retirement savings. Business owners must have a clear and defined succession/exit strategy in order to:

  • Transform control of the business into retirement wealth, and
  • Insure that the future of the business is being managed by the desired parties.

These solutions must be clear, concise, cost effective and tax efficient to attain the optimal outcomes.
Instead of pre-packaged “canned” approaches, these programs should be driven by the creativity needed to reflect the unique needs and goals for each client.
As the competition to attract key people to your company continues to heat up, you need to have a strategy to help you get and keep these highly talented and driven employees.

As a part of their overall compensation package, did you know that 95% of all corporations provide supplemental executive benefit plans, such as salary continuation plans, deferred compensation plans and other benefit packages to their key executives?

Preferred Health Group, Inc can help you compete in the market when it comes to providing executive benefits to your key employees. There are a number of ways you can fund an executive benefit plan that makes the most of the dollars you put towards the plan.

Today, it’s not a matter of can you afford to fund a plan, it’s now a matter of can you afford not to?

Types of Executive Benefits

401(k) Look-Alike Plans

A non-qualified 401(k) look-alike plan gives your valued executives the opportunity to defer larger amounts of pretax income. As an employer, this type of plan:

Helps you attract and retain top performers.
Can be implemented on its own or in conjunction with an existing qualified plan.
Avoids the stringent IRS requirements of qualified plans.
Requires minimal ERISA compliance when properly structured.
Can be informally funded with life insurance.
Can provide cost recovery through the income tax free death benefit.

Nonqualified Deferred Compensation Plans

To overcome the limits of qualified retirement plans, many employers are offering top executives something extra – a non-qualified deferred compensation plan. Under this voluntary arrangement, each selected executive elects to defer a certain amount of future income (deferral can be salary or bonus). Upon retirement, you pay the executive his or her deferred compensation as additional retirement income.

Supplemental Employee Retirement Plans (SERP)

A SERP provides the additional benefits desired by executives, and they allow you, as the employer, to maintain control. By implementing a plan that imposes “golden handcuffs” – restrictions that can reduce or even cause the loss of benefits for the executive if they leave your firm – your ensure a cost-effective method of rewarding and retaining talented management.

Executive Bonus Plans

An executive bonus plan is a way for the employer to “bonus” the employee an amount of money used to fund a life insurance policy. The employee simply pays income tax on the bonus applied as premium. In future years, the employee can draw on the cash value of this policy through loans or withdrawals, and in the event of his or her death, the employee’s family receives the death benefit.

Split Dollar Plans

This type of plan lets you buy the full amount of life insurance coverage you need without paying the premiums personally, the business pays them instead. Your cost is the “economic benefit value” of the life insurance protection. The business is able to recover the greater of the premiums it pays or the policy’s cash value from the policy death benefit upon your death.

Designing Executive Benefit Packages

Designing executive benefit packages requires analyzing your business goals and the needs of your employees. Some issues you may want to consider include:

  • Who should receive the tax deferral — the employee, the corporation or both?
  • Does the employee want to save more on a pretax basis?
  • Does your corporation need “golden handcuffs” to help retain key employees?

Our 4 step process helps ensure effective, compliant programs.

  • Consultation
  • Recommendation
  • Implementation
  • Annual Review

Please contact us today for an initial consultation and additional information.