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In today’s highly competitive executive marketplace, it has become increasingly difficult to attract and retain top talent. Salary is no longer the only compensation driver. Talented employees are looking for a benefit package that will help them protect the financial security of their families and prepare for retirement. The good news is you can offer insurance and retirement benefits that can make a difference for both your executives and your business.
The following describes some incentive benefit plans that you can offer to your key employees. They may even be of benefit to the most important employee in the business- you the owner!
Nonqualified Deferred Compensation Plans (NQDC) are designed to provide additional retirement benefits for key employees above and beyond pension, profit sharing, or 401(k) plans. You can choose which employees are to be covered, the benefits to be provided, and whether the benefit is subject to a vesting schedule. In fact, you can use this type of plan just like it is used by large, publicly owned corporations to reward and attract employees with “golden handcuffs”.
Executive (Section 162) Bonus Plans are a type of incentive plan whereby the business provides an executive with funds that are used to purchase a life insurance policy owned by the employee. You can choose which employees receive this incentive. The employee owns the policy and chooses the beneficiary. There are optional arrangements that can restrict the employee’s access to the cash value until retirement.
The bonus amount you pay is fully tax deductible to the company, and taxed as ordinary income to the employee. You have the option to work out an arrangement with the employee to help cover the income tax liability or use some of our creative strategies to help address this tax liability that helps both the employer and employee so it cost neither party any additional outlay.
We can help your business design a plan solely for you the business owner or include other key employees that will be cost efficient while rewarding those who you choose to reward.