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"How do business owners afford to remain competitive with benefit offerings to highly compensated executives?"
Christopher D. Fay - Principal

Executive Benefits

Accumulate Assets to Provide a Comfortable Lifestyle.

Problems

For key executives, professionals and business owners, accumulating retirement wealth has increasingly become an individual responsibility and less of a corporate benefit. For the highly compensated, restrictions on qualified savings plans and the potential taxation of Social Security benefits limit the amount of retirement assets available. Larger companies are able to afford benefit costs and manage complexity of tax, legal and accounting advice to develop supplemental programs to attract, retain, and reward key employees. How do smaller corporations afford to remain competitive with benefit offerings to highly compensated executives? How will business owners transform their controlling interest into a comfortable retirement?

Solutions

Small to mid-size corporations benefit from having cost effective strategies to assist key talent with growing and protecting retirement savings. Strategies must be clear, concise, cost effective and tax efficient to attain optimal outcomes. The process for developing and maintaining plans should embrace trusted advisors – not alienate them from this process. Rather than prepackaged “canned” approaches, programs should be driven by creativity to reflect distinct needs and goals for each client. We deliver nearly 25 years in design and implementation experience to corporations and closely held businesses. Developing appropriate financing solutions for these programs is critical.

Through a collaborative consulting process coordinated with your current benefit, legal, and accounting advisors, we create strategies similar to these:

1. A non-qualified deferred compensation plan serves as a 401(k) alternative promoting employee deferrals for salary and bonus, employer matching and “catch-up” contributions to provide profit sharing contributions not otherwise eligible to be paid through the qualified plan due to governmental restrictions. The plan provides an indexed savings rate to reflect current economic conditions, and offers substantial pre-retirement survivor benefits and ultimately retirement income based upon individual account balances.
2. A supplemental death benefit savings plan for management employees funded with tax deductible employer contributions and after-tax employee contributions serves as a “Roth IRA” look-alike using institutionally priced life insurance. Executives own the policy, name their beneficiaries, direct plan investments and keep the policy upon termination. This plan provides the employer with a “Modification of Ownership Rights” provision restricting participant access to the account during employment unless otherwise specified.
3. Another variation of the insured savings plan offers the equivalency of pre-tax deferrals, tax deferred growth, sub-account choices, pre-retirement survivor benefits, and strategies for managing account balances at retirement. The employer contributions offset the basic insurance plan costs and the “tax bonus” needed for the plan participant to achieve pre-tax elective savings goal. This plan design maintains the owner’s after-tax cost of contributions to the same cash outlay as if the qualified 401(k) plan match were permitted and not capped under the qualified plan rules.

Other plan strategies include: liability funding strategies using Corporate Owned Life Insurance (COLI), supplemental executive benefit plans for retirement, Bank Owned Life Insurance (BOLI) funding strategies, Employee Stock Ownership Plans (ESOP), Buy-Sell funding strategies, Supplemental Executive Retirement Plans (SERP), Carve-out, Split Dollar, Phantom Stock plans and more.

We can help you make informed decisions to finance your executive benefit solution. We are dedicated to providing personal service, experienced advice and creative strategies.