Employer Deferral Account Plans
As an employer, if you had a way to put a “carrot” in front of your employees that made them aligned with the growth of your business, would that be helpful? Well, if so, let’s discuss who an Employer paid Deferred Compensation Plan can work to your advantage long term.
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
· EBIDTA
· Net profit (Phantom Stock)
· Etc.
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.