Deferred Compensation Plans

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Your company's success can depend on its ability to attract, reward, and retain its key people. A deferred compensation plan can solve for all these needs and more, which is why a significant number of companies offer a plan. 

Recruit

Company's use this plan to attract new leadership talent. A recruiting contribution can be made to a new employee's account and the company assigns the contribution(s) a vesting schedule to simultaneously retain the employee. The contribution is pre-tax to the employee. The contribution can be scheduled to paid to the employee at a future date. 

Restore 

Qualified plan limitations remove an executive's ability to leverage pre-tax dollars to build their retirement portfolio. To restore pre-tax deferral capacity, Congress provided IRC section 409A. Section 409A allows highly compensated employees to defer an unlimited amount of compensation.  

Retain

Employers can selectively make contributions to the account of an executive they desire to retain. The employer can set the vesting schedule to meet its retention needs. The contribution is made pre-tax and isn't taxed to the executive until paid sometime in the future. 

Motivate

Properly designed plans can incorporate long-term incentives. LTIPs are usually a significant portion of overall compensation. The ability to leverage pre-tax deferral and crediting can increase the value an LTIP already provides.  

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