The top 5 myths about executive benefits
by. Christine Burns-Fazzi, Principal, Burns-Fazzi, Brock
There is a lot of mystery swirling around executive benefits. A well-designed plan does more than pay for performance and longevity, or provide the ability to offer supplemental retirement benefits to key executives. While executive benefit plans are designed to recruit, reward, and retain senior executives, they are also arranged to have a positive impact on the credit union’s earnings. Of course, all of this must be accomplished with a constant eye on federal and state regulations.
While we all can agree on what an executive benefit plan is, it is equally as important to note what an executive benefit plan is not. Here are the top five common myths about executive benefit plans:
- Traditional nonqualified deferred compensation with cliff vesting is the only safe way to provide supplemental retirement income to executives (FALSE)
- Hiring a compensation consultant satisfies the board’s fiduciary requirements regarding executive compensation (FALSE)
- Executive compensation tax rules are set and unlikely to change in the future (FALSE)
- There is nothing new in executive compensation planning opportunities (FALSE)
- The best time to install an executive retirement plan is the last five years before retirement (FALSE)
How many did you recognize as a myth? Knowing the ins and outs of executive benefit plans is critical in recruiting, retaining, and rewarding top executives. Executive benefit plans such as split dollar plans are an important tool to enhance the attractiveness of your benefits package.
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