What type of organization should consider Nonqualified Executive Benefits?

Any organization that wants to attract, retain and motivate highly compensated executives, physicians and other professionals. Nolan Financial works closely with organizations in diverse industries including healthcare, insurance, law firms, utilities, financial services, consulting, retailing, and manufacturing.

What type of companies do we work with?

Nolan Financial works with a wide variety of clients. This include clients in the following sectors: Private, Public, Tax-Exempt (Nonprofits), Banks and Credit Unions.

Why should my organization consider nonqualified executive benefit plans?

Today’s workforce is extremely competitive. As the population continues to age, the pool of highly qualified executives, physicians and other valuable employees will continue to shrink and become even more competitive. Nonqualified Executive Benefit Plans and Supplemental Executive Insurance Plans can make the difference in attracting, retaining and motivating your highly qualified talent.

What types of Nonqualified Executive Benefit Plans exist?

There are a wide variety of plans available. These include: Nonqualified Executive Benefit Plans, Bank Owned Life Insurance (BOLI), 457 Plans and Supplemental Executive Insurance Plans.

How do I know what type of plan to consider?

As part of our Solution Process, we perform an in-depth Discovery Process to closely examine your organization’s unique needs and help you determine which type of nonqualified executive benefit plan will best suit your needs.

What is a nonqualified deferred compensation plan?

A nonqualified deferred compensation plan is a type of retirement plan, reserved for highly compensated service providers, that offers the opportunity for pre-tax deferral and/or employer contributions. A properly designed non-qualified deferred compensation plan can be a great financial planning tool for eligible participants.

What is a SERP?

A SERP is a non-qualified employer funded Supplemental Executive Retirement Plan. It is often used by employers to supplement the qualified retirement plan income of their senior executives, which are restricted due to the qualified plan limits on DB and DC plans (i.e. “reverse discrimination”).

What is the most important component of a well-designed nonqualified executive benefit plan?

Flexibility. Designing a plan that is flexible will enable each participant to utilize the plan as a financial planning tool that serves their savings needs.

Why are the assets of a nonqualified plan subject to the claims of creditors?

Nonqualified executive benefit plan assets are required to be at risk and therefore subject to the claims of creditors in the case of a organization’s bankruptcy. This substantial risk of forfeiture is required in order for there to be a deferral of taxation.

What does the term “Top-Hat” mean?

Top-Hat is a term used to define those highly compensated service providers in an organization who are eligible to participate in a non-qualified plan. Eligible participants are generally defined as the top 5-10% wage earners of the organization’s population.

What is “reverse discrimination”?

This is a form of economic discrimination that affects the highly compensated service providers who cannot derive sufficient retirement income from their qualified plans due to the government limits.

What is the best funding alternative for nonqualified executive benefit plans?

There are three primary informal funding options to consider: unfunded, mutual funds, corporate-owned life insurance (COLI). Oftentimes, companies will utilize one of these or a combination depending upon their tax and financial circumstances.

Nonqualified executive benefit plans do not have to be funded, but there are many advantages to informally funding these plans.