As the competition to attract executives continues to heat up, companies need to have a strategy to help them attract and retain these highly talented and driven employees.
Did you know that 95% of all corporations provide supplemental executive benefit plans, such as salary continuation plans, deferred compensation plans and other benefit packages as part of their overall compensation package to their key executives? Executive Benefits also solve the “highly compensated employee discrimination” problems created by limitations on qualified broader-based employee benefit programs.
TradeMark can help you compete in the market when it comes to providing executive benefits to your key employees.
Types of Executive Benefits
Section 162 Plans
Section 162 plans, often called "Executive Bonus Plans," are a simple way to reward your top people. Under this type of plan, the employee purchases a permanent life insurance policy on his or her life. The company bonuses the employee the premium, which is usually considered taxable income to the employee and tax-deductible to the employer. The employee controls the policy, including the death benefit and the cash value, which accumulates tax-free until it is withdrawn.
Nonqualified Deferred Compensation Plans
To overcome the limits of qualified retirement plans, many employers are offering top executives something extra – a non-qualified deferred compensation plan. Under this voluntary arrangement, each selected executive elects to defer a certain amount of future income (deferral can be salary or bonus). Upon retirement, you pay the executive his or her deferred compensation as additional retirement income. Under a properly designed plan, no taxes are due on the money until it is received. Some plans also promise to pay the executive's spouse a benefit if the executive dies before retirement. Others will pay the executive a certain amount in the event of disability. Often life and disability income insurance policies are used to help informally fund the payments.
Supplemental Employee Retirement Plans (SERP)
A SERP provides the additional benefits desired by executives, and they allow you, as the employer, to maintain control. By implementing a plan that imposes “golden handcuffs” – restrictions that can reduce or even cause the loss of benefits for the executive if they leave your firm – your ensure a cost-effective method of rewarding and retaining talented management.
Executive Life Insurance Plans
Deliver pre- and post-retirement life insurance benefits to executives that are typically lower in cost, but provide more comprehensive benefits than traditional group plans. These plans can provide special opportunities for tax-deferred cash accumulation, portability and corporate recovery of plan costs.
Executive Health Plans
Research has shown that many corporate leaders are at risk for largely preventable conditions, such as heart disease. Executive Health plans offer comprehensive evaluation and follow-up care to many executives and business leaders. Executive health plans increase early detection, identify risk factors, and help people make healthy lifestyle choices that will help prevent serious conditions in the future. By having a healthy leadership team, organizations are taking an important step toward improving their competitive advantage and their bottom line. Executive health plans provide comprehensive and convenient personalized health services. With Executive health plans, executives will not experience crowded reception areas or long wait times. Instead, they will have one-on-one attention from a qualified and experienced physician and nurse who will provide all the components of a comprehensive health assessment in one well-coordinated visit.
Executive Disability Plans
These plans supplement long-term group disability plans, providing executives with higher benefit limits, more comprehensive features, and contractual guarantees. Most group long-term disability policies provide roughly 60 percent of an employee's income, up to a stated maximum. For most employees, two-thirds of their income will not exceed the employer's maximum benefit. But for highly compensated executives, the maximum benefit may amount to less than 50 percent of their take-home pay in the event of a disability. To address this problem, employers often purchase additional individual disability income policies on these executives to bring their total benefit, on a percentage basis, up to the same level of all other employees. These plans can also continue to fund retirement benefits that are curtailed upon disability.
Executive Long-Term Care Insurance
These plans provide non-discriminatory benefits to key employees without imputed or regular income taxation. Employer premium payments are fully tax-deductible. Special plans are possible to be fully paid up by normal retirement age, thus alleviating the need for premium payments during retirement.
Can your company afford NOT to offer these valuable executive benefit programs?
Please contact TradeMark Insurance Agency to discuss these plans and how they can benefit your organization.