Supplemental Retirement Plans

For Executives & Key Employees

Providing competitive retirement benefits is essential for attracting and retaining top talent. Supplemental Retirement Plans (SRPs) are a valuable way for employers to offer additional retirement savings opportunities beyond traditional plans like 401(k)s. These plans help key executives and business leaders build long-term financial security while providing tax advantages for both the employer and employee.

What Is a Supplemental Retirement Plan?

A Supplemental Retirement Plan (SRP) is an employer-sponsored benefit that provides additional retirement savings opportunities beyond standard qualified plans. These plans are often customized for executives and leadership teams who may face contribution limits on traditional 401(k) or pension plans.

Types of Supplemental Retirement Plans

1. Non-Qualified Deferred Compensation (NQDC) Plans

✔ Allows executives to defer a portion of their salary or bonuses for future retirement income.
✔ Funds grow tax-deferred until withdrawal.
✔ Provides flexibility in payout options, such as lump-sum or scheduled distributions.

2. Executive Bonus Plans (Section 162 Plans)

✔ Employer funds a life insurance or annuity policy for the executive.
✔ Executive owns the policy and can access cash value for retirement.
✔ Bonuses are tax-deductible for the employer.

3. Split-Dollar Life Insurance

✔ Employer and employee share the cost and benefits of a permanent life insurance policy.
✔ Provides tax-efficient retirement income through policy loans or withdrawals.
✔ Helps executives with estate planning and wealth accumulation.

4. Supplemental Executive Retirement Plans (SERPs)

✔ Employer-funded retirement benefits designed for select executives.
✔ Typically structured as a promise to pay future benefits rather than direct contributions.
✔ Can include vesting schedules to encourage long-term leadership retention.

Key Benefits of Supplemental Retirement Plans

For Employers:

✔ Retain & Reward Leadership – Competitive retirement benefits help attract and keep top executives.
✔ Customizable Plans – Employers can tailor benefits to meet business and leadership needs.
✔ Minimal Compliance Burdens – Unlike traditional qualified plans, many SRPs have fewer IRS regulations.
✔ Tax Advantages – Some plans offer tax deductions for employer contributions.

For Employees & Executives:

✔ Greater Retirement Savings – Helps executives save beyond traditional contribution limits.
✔ Tax-Deferred Growth – Funds accumulate tax-free until retirement, optimizing long-term wealth.
✔ Flexible Payout Options – Employees can tailor withdrawals to fit their financial goals.
✔ Additional Security – Provides financial stability beyond Social Security and employer-sponsored 401(k)s.

Who Should Consider Offering Supplemental Retirement Plans?

Supplemental Retirement Plans are ideal for:
✔ Mid-to-large businesses looking to enhance executive benefits.
✔ Companies seeking long-term retention strategies for key leadership.
✔ Employers who want to offer tax-efficient compensation alternatives.

Get Started with a Supplemental Retirement Plan

If you’re looking to strengthen your leadership benefits package, we can help you design and implement the right Supplemental Retirement Plan for your organization.