Many businesses rely on the key employees within their organization for success. Competition for these people can be aggressive, so your business may be looking for strategies — beyond qualified plans — to help recruit, reward and retain key talent.
Here are a few of options which fall outside the traditional qualified deferred compensation route. The design and implementation of these options can be highly customized to fit your particular requirements and your potential exit strategy.
Insurance-based Retirement Plan:This type of plan utilizes a life insurance policy to provide both supplemental retirement income and death benefit protection. It is typically purchased by owners of pass-through entities such as S corporations and LLCs; however, any individual can utilize this type of plan.
IRC Section 162 Executive Bonus Plan: An executive bonus plan is an employee benefit plan that allows an employer to provide a select employee or a group of select employees with additional compensation that will be used to pay premiums on a life insurance policy that provides both supplemental retirement income and death benefit protection.
Restricted Executive Bonus Arrangement: Like the traditional executive bonus plan, the restricted executive bonus arrangement (REBA) allows an employer the opportunity to provide a select employee or a group of select employees with additional compensation that will be used to pay premiums on a life insurance policy that provides both supplemental retirement income and death benefit protection. The REBA also provides a retention mechanism that attaches the additional compensation to a vesting schedule and repayment obligation upon premature separation from service.
Employee Deferral Plan: An employee deferral plan is an employee benefit plan that allows a group of select employees the opportunity to defer current compensation on a pre-tax basis until a later date.
Defined Contribution Supplemental Executive Retirement Plan (DC SERP): A DC SERP is a non-qualified deferred compensation plan that does not allow employees to defer their own compensation. The employer credits employees’ accounts with either a stated amount or discretionary amounts, and the employees’ benefits are based on their account balance.
As mentioned earlier, these are but a few of the highly customizable options which may work for your business to recruit and retain top talent. Additionally, they can supplement existing deferred compensation plans used by ownership.
Please contact Sanjiv Saste, Financial Advisor at Raymond James Financial Services at 813-490-6610 or [email protected] for further information.