Recruit, Retain, Reward Top People
It is getting increasingly harder to recruit, retain and reward top people. Too often, qualified plans fail to provide enough incentive or reward for highly paid execs. As you know, their programs fall under IRS compensation limitations and non-discrimination tests. Even the deferral maximum limits execs who don’t need all of their income. Strategically, then, how can you keep your key contributors happy, motivated and rewarded?
Here are several things you might consider:
Deferred Compensation
Deferred compensation programs or 401(k) wrap-around plans allow key executives to save more income on a tax-favored basis. The key is this: a non-qualified retirement plan is not subject to the same stringent reporting and testing requirements of a qualified plan.
Restricted Bonus Arrangements (RBA)
An RBA provides a flexible and cost-effective method to reward a group or individual key executives while creating an incentive to remain with the company for a period of time before they are allowed access to the benefit. An RBA is simple to design, install and maintain, is tax deductible and not subject to the same government compliance or restrictions as qualified plans.
SERP
Your company can enter into a Supplemental Executive Retirement Plan (SERP) with executives. They make no election to defer salary. Instead, your company agrees to supplement their own retirement accumulations with an additional stream of income. You provide this income using a sinking fund or other techniques.