Executive Savings & Deferral Plans \ Supplemental Executive Retirement & Retention Plans
Nonqualified plans allow executives to defer compensation on a pretax basis until a predetermined date or event (e.g., retirement); and unlike qualified plans, nonqualified plans allow an employer to limit eligibility to a select group of key employees. Nonqualified plans can also incorporate company contributions (e.g., deferral matches or profit sharing). They are convenient because they allow for the deferral of various forms of pay, including base, bonus, commissions, and special incentives, without the cap on the dollar amount saved or contributed. Companies value them because they: provide a tool to help employees save for retirement or other asset accumulation needs (e.g., tuition payments or the purchase of a home) on a tax-favored basis; allow employees to make up for limitations placed on qualified plans; recruit, retain, and reward key executives; and align executive pay with shareholders.
Supplemental executive retirement and retention plans (SERPs) help retain and reward executives critical to the continuity of your company’s success. SERPs are a viable alternative for top long-term executives concerned about the concentration of their post-retirement wealth in stock options.
Effective nonqualified plan offerings minimize expenses while attracting and retaining quality executives to help a company remain competitive.