Employer Deferral Account Plans
Defined Contribution: The employer may make an employee elective contribution that is based upon one or more of the following:
· Formula of Gross/Net Income
· Formula of Gross/Net Sales
· Net profit (Phantom Stock)
Defined Benefit: The Employer promises to provide a set amount of income (percentage of salary or fixed amount) and is committed to funding the obligation over a set number of years (determined by the employer’s needs)
In combination with employee elective deferrals plans, these plans can provide a meaningful “golden handcuff” that can help a company attract, retain and reward their key employees.