tailieunhanh - Lecture Employee benefits and retirement planning - Chapter 26: Nonqualified deferred compensation

This chapter covers nonqualified deferred compensation, focusing somewhat on retirement aspects. After pointing out why an employer might want to incorporate such a plan – primarily recruiting, retaining, and rewarding employees – advantages and disadvantages are discussed. | Any employer retirement, savings, or deferred compensation plan for employees that does NOT meet the tax and labor law (ERISA) requirements that apply to qualified pension and profit sharing plans What is it? Copyright 2009, The National Underwriter Company To provide: deferred compensation to executives and key employees only additional deferred compensation to executives receiving maximum qualified plan benefits deferred compensation to select key employees with different terms or conditions than others have When is it indicated? Copyright 2009, The National Underwriter Company And when executive or key employee wants to leverage employer tax savings for future benefits employer needs to recruit, retain, reward, retire executive talent closely-held corporation wants to attract and hold nonshareholder employees When is it indicated? Copyright 2009, The National Underwriter Company flexible plan design minimal IRS, ERISA, and other governmental regulatory requirements to meet tax deferral for employees marginal tax rates has favored corporate financing of deferred compensation in lieu of cash bonuses (but not at present) Advantages Copyright 2009, The National Underwriter Company employer can use as ‘golden handcuffs’ use of informal financing arrangements (. corporate owned life insurance) can provide employee with greater confidence of future payment than employer’s unsecured promise assets set aside in some types of informal financing arrangements can still be used by corporation Advantages Copyright 2009, The National Underwriter Company Employer’s tax deduction deferred until income taxable to employee plans often rest on employer’s unsecured promise to pay and do not have protection of tax and labor law accounting treatment may reduce confidentiality of arrangement Disadvantages Copyright 2009, The National Underwriter Company some employers lack the structure necessary to successfully use nonqualified deferred compensation plans S | Any employer retirement, savings, or deferred compensation plan for employees that does NOT meet the tax and labor law (ERISA) requirements that apply to qualified pension and profit sharing plans What is it? Copyright 2009, The National Underwriter Company To provide: deferred compensation to executives and key employees only additional deferred compensation to executives receiving maximum qualified plan benefits deferred compensation to select key employees with different terms or conditions than others have When is it indicated? Copyright 2009, The National Underwriter Company And when executive or key employee wants to leverage employer tax savings for future benefits employer needs to recruit, retain, reward, retire executive talent closely-held corporation wants to attract and hold nonshareholder employees When is it indicated? Copyright 2009, The National Underwriter Company flexible plan design minimal IRS, ERISA, and other governmental regulatory requirements to .