Executive Benefits:
The key person or persons in a company can often times be the difference between the firm flourishing or floundering. Establishing a benefits package tailored for their needs protects the company by securing their retention, as well as adding to the top line by their satisfaction being instrumental to growth. Who should receive the tax deferral – the employee, company or both?
Does your corporation need ‘golden handcuffs’ to help retain key employees?
Does your employee want to save more on a pretax basis?
Non-Qualified Deferred Compensation
A non-qualified deferred compensation plan allows you to set aside funds for the benefit of a select group of highly compensated individuals of a firm. Plans can be designed for the employee contributions to be pretax salary deferral, corporate contributions or both. The plans allow for specific guidelines as to when the compensation is available to the employee. For example, the deferred compensation can be available at retirement or after a certain number of years into retirement.
These plans are non-discriminatory, which simply means they can be focused on anyone in the company, and are not subject to testing as in the case of 401k’s or other retirement plans.
Executive Bonus Plan
This plan is a way to compensate select employees, regardless of their position or income, by paying a cash bonus to the employee or making a purchase of an investment for the employee’s behalf. The bonus plan is taxable to the employee and tax-deductible to the employer.
Executive Life
Executives are often under-insured relative to the amount of income they are producing, and their premature passing can be detrimental to their families. The company purchasing life insurance for the family can protect them in the event of a loss. The benefit is tax-deductible to the business and taxable to the family.
Key Person
Often referred to as "key-man insurance", this is a life insurance policy on key persons in a company. Different from executive life, this policy is designed to protect the company in the event of the early passing of a key person. Companies are quick to insure their equipment and properties, as their values are tangible, but their key person is often overlooked.
Disability Insurance
While group disability insurance is a common benefit for groups, there are often limitations in the group contract in regards to income the policy will protect. Setting up additional policies for key persons who have an income higher than the group plan permits allows for them to protect a higher percentage of income. Also, the contracts are permanent and portable for the key person.
Long Term Care
Many executives spend many years building a substantial nest egg in preparation for retirement. Expenses dealing with in-home or nursing home care can wipe those assets out in just a short number of years. By offering a group long-term care policy, companies can provide their executives peace of mind by protecting their assets with the insurance.
