Supplemental Executive Retirement Plans
A Supplemental Executive Retirement Plan (SERP) is an agreement between an employer and a key executive, where the employer agrees to provide either a stated amount of retirement income or a set contribution amount to the executive, who may have contributed the legal maximum to their qualified plan contributions.
For any SERP, the benefits may be subject to a vesting schedule (cliff vesting or graded vesting) to increase the retentive nature of the plan. Additional features may also be built into the SERP plan, including:
- Pre-retirement death benefits
- Cost of Living Adjustments (COLA)
- Change of ownership / change of control provisions
- Rabbi Trust or Springing Rabbi Trust
Typical Objectives:
- Attract, retain and reward key executives who remain with the organization
- Provide supplemental retirement income for key executives
- Act as a “golden handcuff”