Retirement Gap for Executives
Higher paid employees, including executives and managing partners may not be saving enough for retirement with your current benefits structure. If they rely solely on Social Security and qualified plans, there may not be adequate retirement income when they need it. By offering select key employees valuable protection and retirement benefits, you can tie them to your business and help secure their financial futures.
Who are your key employees?
- Top executives/management
- Sales leaders
- Business owners
- Highly compensated employees
What exactly are NQDC plans?
Nonqualified deferred compensation plans are at the core of many executive benefits platforms. These plans are unfunded contractual obligations of the employer to the plan participant. They are only available to “Top Hat” selected highly compensated or management employees. The structure of these plans allows key employees to save in excess of their qualified plan limits, making it the number one reason to offer this NQDC plan.
According to a recent study done by Principal, more than 94% employers say that the reason they offer nonqualified deferred compensation (NQDC) plans is that it allows them to give key employees an additional mode of saving for retirement. These NQDC plans are becoming more and more relevant as economic conditions improve domestically. Since they serve to close the gap in retirement savings, they create an additional incentive for key employees to not only choose to work for you, but to stay there as well.
Below is the Survey of Nonqualified Deferred Compensation Plan Sponsors and Participants, that will detail the importance of NQDC plans and how they can be used as a retention tool for key persons.