Executive Deferred Compensation

The senior directors of Total Compensation Solutions can help your organization decifer the complex issues of executive deferred compensation.

Call TCS about our executive deferred compensation services at 914-730-7300 or email Tom Bailey.

More on Executive Deferred Compensation

Tax legislation, new government regulations and increasing shareholder awareness over the past twenty years have made retirement planning for executives a moderately difficult topic for consideration. Traditional retirement benefits have been eroded by government regulation and companies now seek to endow their senior executives with non-qualified benefits that replace some of the lost retirement benefits.

Whether through a defined contribution or a defined benefit retirement plan, employers now find it necessary to offer non-qualified plans as a means of attracting and retaining key employees. These non-qualified benefits create new benefit opportunities. They are an essential part of the total rewards system for senior executives and have become an integral part of the total compensation package.

There are three types of plans that fall into the broad category of Executive Deferred Compensation can take many forms both qualified and nonqualified:

Excess or Restoration Plans that restore only those benefits limited by the government. Some of these limits imposed by the IRS for 2014 include:

  • 401(k) or 403(b) elective deferral = $17,500
  • 457(b) elective deferral = $17,500
  • Defined Benefit Plan Maximum = $195,000
  • Defined Contribution Plan Maximum = $49,000
  • Qualified Plan Annual Compensation Limit = $260,000

Voluntary deferred compensation plan that allow executives to defer portions of their overall compensation package including:

  • Bonus or Incentive plan payments
  • Long-term cash compensation payments and/or
  • Other Cash compensation

Supplemental Executive Retirement Plans (SERP) that offer a competitive retirement package for mid-career executives that have relatively fewer years in the company’s retirement plan.

In a robust economy, deferred compensation allows executives to maintain their standard of living after retirement on a tax effective basis. Deferred compensation also allows executives to mitigate the negative effects of the economy after their retirement.

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