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Recruit, Retain and Reward Top Talent with Executive Benefit Planning

Recruit, Retain and Reward Top Talent with Executive Benefit Planning

September 27, 2021

You want to attract and retain top talent.  So does your competition.  But sometimes competitive cash compensation is not enough.  Top leaders expect an executive benefit package that goes beyond salary and bonus potential.

Here are four executive benefit strategies our clients successfully use to recruit, retain and reward top talent:

  1. Executive Bonus Plan
  2. Voluntary Deferred Compensation Plan
  3. Supplemental Executive Retirement Plan (SERP)
  4. Split-Dollar Plan

Employee stock options and programs like 401(k) plans are a good start, but they may not meet the financial expectations and needs of the most talented executives.  These key employees want to enjoy a rewarding, worry-free retirement, pay for their children’s college education, and establish sound financial security.

Executive benefits offer supplemental resources and protection for your company’s key executives.   When you offer executive benefits to suit individual needs, you round out your total benefits offering.  Cedar Point Financial LLC will help you create a program to help attract high-performing individuals and motivate them to remain with your organization by providing a meaningful, personalized incentive package.

Executive Bonus Arrangement

To motivate your executives to stay with the company and remain engaged, consider contributing to a specially designed employee-owned life insurance policy.  The premium amount becomes a compensation bonus to the executive.

With these plans, the premium amount is tax-deductible to the company.  Cedar Point Financial LLC structures these plans so the policy's tax-advantaged cash value accumulation and death benefits provide:

  • Supplemental Retirement income
  • Survivor income Benefits
  • Estate liquidity
  • Long term care protection
  • Educational funding

Want to strengthen the retention provisions?  You can add a restrictive endorsement that limits the executive’s access to the policy cash values until a pre-determined date.

 Voluntary Deferred Compensation Plan

Giving the option to an executive to defer a portion of their compensation to a later date may be a solution to limitations in traditional qualified plans.  Nonqualified deferred compensation plans can be designed to mirror familiar features of basic 401(k) plans, but without the cap on the dollar amount saved or contributed.  

These plans allow deferral of various forms of pay, including base, bonus, commissions, and special incentives.  More flexible payout schedules can be arranged as well.

Cash value life insurance may be an attractive informal funding method due to its tax-free death benefit, potential tax-deferred cash value accumulation, and tax-free income via policy loans and distributions.

Supplemental Executive Retirement Plan (SERP)

As opposed to a voluntary nonqualified deferred compensation plan, a SERP is an employer funded deferred compensation arrangement that provides supplemental retirement income to a participant, based on the employee meeting certain vesting or other specified conditions.  A SERP design can also incorporate voluntary executive deferrals where both the employer and executive are deferring compensation to a pre-determined point in the future.

Split-Dollar Plan

A split-dollar arrangement is a method of sharing the benefits and funding of a cash value life insurance policy.  In addition to providing your executives with a source of retirement income, they also receive death benefit protection for their families.

Furthermore, a split-dollar plan has a number of benefits for you as the employer:

The executive becomes more closely aligned with the employer

The plan is simple to administer and can provide for employer cost recovery

 The policy's cash value becomes an employer asset

Non-profit organizations also need to attract and retain top talent and are increasingly using split-dollar life insurance arrangements as alternatives to traditional non-qualified deferred compensation plans subject to §457(f) or other forms of taxable compensation.  Cedar Point Financial LLC is familiar with the tax and regulatory nuances of compensation planning for tax-exempts and can show you how to easily implement an effective split-dollar plan.

Your Best Executive Benefit Option

In an effort to help recruit, retain and reward top performers, Cedar Point Financial LLC provides the tools to give you a competitive advantage.  Whether you’re looking for control, flexibility, simplicity or deductibility in an executive benefit strategy, we can design the right plan for you.