Article Abstract:
Nonqualified plans are increasingly offered to selected executives, due to the advantages in each variety of plan. However, they fail in a crucial task for employers, retaining executives. The low-costing silken handcuff approach seeks to solve this by having an ownership rights agreement modified by an insurance company. The employee cannot purchase against the cash values prior to the agreement's expiration; a bonus buys equity-based life insurance on an 'access' schedule endorsement. Thus, there are advantages and flexibility for both sides, such as the employer deciding the annual deposit amount while getting tax deductions, and the employee assured of several enhanced benefits.
User Contributions:
Comment about this article or add new information about this topic:
Article Abstract:
Companies face the difficult task of funding nonqualified deferred compensation schemes. With the emerging trend of nonqualified plans being a vital part of the compensation package, companies need to evaluate the financial impact of such plans. The company deems it necessary to allocate assets for the nonqualified deferred compensation plans through the mutual consent of the company and the individual employee. After the planning and development of the retirement scheme, different company assets may be used to fund the plan, which includes corporate-owned life insurance policies, tax-exempt investments and taxable investments such as mutual funds.
User Contributions:
Comment about this article or add new information about this topic:
Article Abstract:
Companies need to perform certain steps in developing nonqualified deferred compensation schemes (NQDC) for their employees. NQDC needs careful planning and integration of the administrative, communicative and recorkeeping functions. Nonqualified plans do not require any legal documentation, however, any plan should have a record and be documented for reference. Standard procedures should be established for a smooth-running implementation of the process. The scheme's features and options should be communicated to the participants for better understanding.
User Contributions:
Comment about this article or add new information about this topic: