Fulcrum Partners: Helping Organizations Define Optimal Executive Benefits Opportunities

Fulcrum Partners: Helping Organizations Define Optimal Executive Benefits Opportunities

September 20, 2018

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In the weeks leading up to the passage of the Tax Cuts and Jobs Act of 2017, nearly everyone that receives, contributes to, sponsors or advises on executive compensation, experienced some level of “tax code change anxiety”. While full clarification on a few select aspects of federal tax code reform is still pending, many defined strategies and opportunities are available.

In general, the federal tax reform initiated last December has affected executive compensation, including having an impact on how a nonqualified deferred compensation plan (NQDC) is utilized as a retirement benefit for executives and key employees. While regulations do impose certain restrictions on sponsors and participants, the effective operation of NQDC under these new regulations merely requires some additional planning and the guidance of experienced plan design advisors.

Organizations rightfully continue to demonstrate confidence in the value of well-designed NQDC plans as reflected in the recent survey conducted by the Plan Sponsor Council of America (PSCA). The survey, which involved 174 participants from a variety of industries, a range of company sizes, and both private and public companies, supports the PSCA’s observation that the tax reforms set in motion late last year, could, “heighten impact of NQDC plans as a retirement benefit for executives.”

Recruit, Reward, Retain and Retire

In a growth economy and strong job market, employers are compelled to recruit and then retain the top talent needed to keep their company competitive. Organizations can plan for their future by attracting key talent with signing bonuses that are tied to the business objectives of the company. They can structure bonuses with vesting schedules that reward executives for staying with the company, offer incentive-based contributions to the plan to drive organizational and individual performance, and ultimately position executives to retire confidently, restoring the company match benefits disallowed in qualified plans because of compensation limits or Actual Deferral Percentage/Actual Contribution Percentage testing.

The 2018 Non-Qualified Deferred Compensation Plan Survey, conducted by PSCA, reveals that employers and employees clearly see NQDC plans as a significant component in corporate and individual success and stability:

  • 36.3 percent of survey participants indicated that the most common reason employers offer an NQDC plan is to “have a competitive benefits package” and 23.4 percent believe the reason is to help “eligible employees accumulate assets”.
  • 50 percent of all employers surveyed allow both employer and employee contributions to NQDC plans.
  • And, nearly 60 percent of plans set money aside to fund benefits.

Further inspiring interest in NQDC plan options may be growing concerns over federal tax code changes that have reduced the deductibility of state and local taxes, and which may effectively raise taxable income, especially for high-earning workers. Yet despite the successful use of NQDC plans by many organizations, a company can only know if such a plan is best for them, when its complete financial picture, along with its goals and objectives are studied and then a customized benefits plan is designed specifically to support the company’s needs.

Optimal Plans. Creative Benefit Design Insights

Benefiting from the opportunities a nonqualified deferred comp plan affords begins with evaluation and assessment. “Organizations may,” said Tom Chisholm, Managing Director Fulcrum Partners Chicago, “benchmark compensation while overlooking the quantifiable value of executive benefits. This is a fragmented approach.

“At Fulcrum Partners, we provide analytics for measuring benefits and benefit outcomes as an integrated part of retirement income. We compare total compensation for peer groups, analyze retirement contributions and equip your company with insights on all executive benefits and perquisites. An NQDC plan design for your company should be a bespoke solution and it should position your organization to effectively balance risk and reward.”

The executive benefits advisors at Fulcrum Partners average more than thirty years in executive compensation and benefits consulting. The firm is wholly member owned, which allows it to remain independent, flexible and responsive. Founded in 2007, with offices in Ponte Vedra Beach (Jacksonville) and Orlando, today the company has thirteen nationwide locations, all under the leadership of experienced executive benefits professionals. Fulcrum Partners LLC is an Independent Member of the BDO Alliance USA.

You can learn more about the customized executive benefits benchmarking and creative plan design offered by Fulcrum Partners at FulcrumPartnersLLC.com.

Securities offered through Valmark Securities, Inc. Member FINRA, SIPC, 130 Springside Drive, Akron, OH 44333-2431, Tel: 1-800-765-5201. Investment Advisory Services offered through Valmark Advisers, Inc., which is a SEC Registered Investment Advisor. Fulcrum Partners LLC is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.


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