Tag Archives: 409A

A Video about 409A rules and their applicaiton

Sample Phantom Stock Plan

In today’s post COVID world, are you finding it hard to keep your best people happy, while making sure that you don’t overpay the rank and file employees? Well maybe a Phantom Stock Plan, informally funded using key man life insurance, might be an answer.

Check out this sample program from one of our carriers, Guardian. It outlines these benefits in easy, simple to understand discussion pages, and then shows you the cash flow from the business, the benefits provided to the participant and his family in case of pre-retirement death, and the flexibility available to the company in funding this benefit, that, depending on the age and tenure of your employee, can provide a significant supplemental income at retirement that prevents them from leaving for a few extra thousand in compensation

Click on the following link for a copy of a Phantom Stock Sample.  Then, if you’d like to a have a custom design done for you or your company, give us a call at 610.292.9330 or send us an email at info@SchiffBenefits.com.

NQDC (409A) – Deferred Compensation – A Short Overview – You Tube

Watch this video and learn about the NQDC (409A) – Deferred Compensation Plans and how you can implement one easily

Deferred Compensation Ins and Outs – Video

Deferred Compensation Ins and Outs, and Interview with Matthew Schiff

This is the Third Clip in a series of three. Check out our articles for additional videos.

Attraction and Retention of the Key Employee

Most employers would agree that losing their top salesperson would have a major impact on future earnings for the company.  Moreover, when the overall costs associated with finding, hiring and training a new employee are included in replacing the exiting employee, more and more employers would rather find a way to retain that key employee rather than letting them leave for an additional $10,000 of current compensation or some other fringe benefit.

According to a quarterly CEO survey released by the Vistage Confidence Index at the end of December 2012,

 “Most of the shift has been toward keeping the number of employees unchanged as just 11% expected to reduce their staffs. While the proximate cause is an anticipated slowdown in revenue growth, uncertainty about federal tax and spending policies has been the central cause for lower growth prospects.”

It is in this light that small and mid-sized employers are trying to find ways of creating golden handcuffs, add additional benefits that were normally only available at larger corporations, or just outright increasing regular compensation.

Possible Solutions:

 

SERP – Supplemental Employee Retirement Plans have always been used in the larger corporations as a means to retain key employees, but because most smaller employers do not have a dedicated Human Resource person, it was often difficult to implement and maintain.  With the help of Schiff Benefits Group these plans can be structured to resemble a 401(k), a phantom stock ownership plan, or as a defined benefit income program.

 

In each of these plans the employer would  make the contribution on behalf of the selected employee, being as restrictive or lenient on the vesting of this benefit, and either funding the program on a pay as you go basis or setting cash aside in a separate account for later use of funding  these future benefits.

Executive Long Term Care or Disability Insurance – With the ever increasing age of the US population, both Long Term Care and Disability

Insurance are an ever increasing concern for key employees.  It is estimated that 50% of the population will have a need to Assisted Living sometime during their life and as such more employers are offering these programs as incentives for employees who remain at the company after so many years.

 

Cost recovery plans – Because the cost of employee benefits may be increasing, employers are looking for ways to recover or offset these costs.  While this has traditionally been done in the fortune 500 companies over the last 20 years, these plans are becoming more attractive to the small and mid-sized business owner.

 

As part of this program the employer may choose to purchase Company Owned Life Insurance to recapture the costs of benefit programs.  The amount of insurance purchased is usually equal to the present value of the future benefit costs and the insurance will be paid for, owned by and the beneficiary will be the business.  The insurance will remain an asset of the corporate and may have a positive impact on the future earnings of the company.

 

Because of insurable interest laws, it is recommended that the employer limit the insurance to only highly compensated or management employees and offer a pre-retirement survivor benefit in case of pre-mature death.