Non-Qualified Deferred Compensation

Supplemental Executive Retirement Plans

A Supplemental Executive Retirement Plan is an arrangement where an employer agrees to pay additional income to an employee upon death, disability or retirement.

Deferred Compensation Plans By Employee

Election

An Elective Deferred Compensation Plan is an arrangement where an employee defers a portion of current income until death, disability or retirement.

Advantages To Supplemental Executive

Retirement Plans

The advantage to the employee of receiving the income after retirement is that normally he or she will be in a much lower tax bracket than if he or she received the benefit currently.

The employee is not taxed on income earned until some time in the future.
 

The employer can selectively choose the participants of the plan.

Benefits can be designed as "golden handcuffs" to encourage a   key employee to continue to work for the employer.

Most employers can provide unlimited benefits in place of, or in addition to, those receivable under tax-qualified pension or profit sharing plans.

Why Non Qualified Deferred Compensation

Agreements Should Be Fund With Life

Insurance?

Life insurance is the only vehicle that can assure that the funding will be complete at the death of the employee.

Life insurance generally accumulates on a tax-deferred basis.

Life insurance can be designed so that most employers recover their costs on a tax-free basis.

Deferred Compensation Plans By Employee

Election

The employer agrees to pay employee or designated beneficiary supplemental benefits upon death, disability or retirement of employee.

The employee agrees to defer a portion of current income and employer agrees to pay the employee or designated beneficiary. Deferred Compensation upon death, disability or retirement of employee.

The employer applies for and is the owner and beneficiary of a life insurance policy insuring the employee.

Upon death, disability or retirement of the employee, the employer pays the agreed benefits to employee or designated beneficiary.
 

The employer recovers cost of implementing plan from the life insurance policy insuring employee.