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Deferred compensation plans were created
in response to the limited amount of retirement income an
executive will derive from his or her 401(k) or pension plan.
Under a Deferred Compensation arrangement, an executive elects
to defer a portion of future income into the plan, which enables
him to reach his target income at retirement.
Retirement plans can be either qualified
or nonqualified. Qualified plans are fully subject to the
Employee Retirement Income Security Act (ERISA) and have precise
contribution limits. Nonqualified deferred compensation plans
(NQDC) seek exemption from burdensome funding, participation,
vesting and disclosure requirements imposed on qualified plans.
NQDC plans are maintained by the employer and represent an
unsecured employer promise to pay a benefit in the future.
The most common type of NQDC is the Top Hat
plan, designed for select executives and highly compensated
employees. NQDC plans are not subject to ERISA restrictions,
filing or reporting regulations, and cannot be funded with
assets set apart from the employer or creditors.
EPIC Financial offers consulting
in both the qualified and the nonqualified arena. For non-qualified
plans, click on the Deferred Compensation rollover menu to
the left. For Qualified
Plans click on the menu item to the left. Or contact
us for a consultation.
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