Executive Deferred Compensation Plans


A key element of all successful businesses is retaining and rewarding key people. Most typical compensation and employee benefit packages (including Social Security) actually penalize highly paid employees by restricting retirement benefits, even though the highest concern among executives and key people is financial security in retirement.A deferred compensation plan allows your executives to set aside money they’ve earned to be paid to them at a later date, thereby making the funds available upon their retirement.

Non-qualified Deferred Compensation Plans

Non-qualified deferred executive compensation plans can be either elective or non-elective. In a non-elective plan, the deferred compensation is essentially a continuation of salary after retirement or termination. It’s a feature that can help key employees stick around, as they know they will be taken care of after they are gone from the company.

Section 409a deferred compensation plans are a form of non-qualified deferred employee compensation.

Supplemental Executive Retirement Plans (SERP)

A SERP is a type of flexible non-qualified deferred compensation plan that requires no IRS regulations or approval and allows employees to defer taxes on their investments until a later date.

Section 457 deferred compensation plans fall under the category of supplemental executive retirement.

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