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One of the most effective ways an employer
can assist executives in reaching target retirement goals
is through a nonqualified supplemental executive retirement
plan (SERP), which provides additional retirement benefits.
With SERPS, also referred to as Top Hat plans, executives
do not defer current salary or bonus because the dollars used
are provided entirely by the employer.
There are many types of SERPs such as offset
plans or excess benefit plans, and they may be tied to the
employer's qualified retirement plan. In calculating benefit
formulas, employers may select a defined benefit or defined
contribution. Defined benefit provides a stated monthly and
annual amount at retirement; defined contribution specifies
a calculation based on lost benefits.
There are also many plan versions and unlimited
benefit and contribution formulas that may be used in plan
design. What's more, careful consideration of withholding
rules, tax implications and golden parachute payments is essential.
Contact us to discuss a SERP
plan for your company.
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