Deferred Compensation News and Updates

Deferred Compensation News brings you the latest information and insights on 409A nonqualified deferred compensation; institutional COLI, BOLI, and ICOLI; tax-and cost-efficient non-COLI funding strategies; low-cost tax managed non-COLI asset/liability designs; executive benefits benchmarking; succession planning and timely issues of executive pay and benefits. 
Featured image for “Assessing Your Plan Administrator and Your Nonqualified Deferred Comp Plan or Rabbi Trust”
April 10, 2019

Assessing Your Plan Administrator and Your Nonqualified Deferred Comp Plan or Rabbi Trust

deferred compensation

Big Changes. Inevitable Questions Earlier this week, Principal Financial Group Inc. announced that it has entered into an agreement to buy Wells Fargo & Company’s retirement plan services unit for $1.2 billion. The acquisition covers all existing Wells Fargo Institutional Retirement and Trust (IRT) business. As of December 31, 2018, the respective Wells Fargo retirement businesses had $827 billion in assets under administration served by approximately 2,500 employees in locations across the US, the Philippines and India. The transaction is expected to be finalized early in the third quarter, subject to receipt of required regulatory approval. Given the scope and timeline of this transition, questions and concerns may logically arise. The team at Fulcrum Partners is wholly independent, which enables us to provide thoughtful, strategic insights, specific to your organization’s unique needs and objectives. We can leverage our independent position to help your company identify a third-party administrator or trustee that specifically meets your objectives and the needs of your nonqualified plan participants. Evaluating the Third-Party Plan Administrator or Trustee Fulcrum Partners’ proprietary evaluation process assesses potential plan administrators based on: Ownership structure/background Client data/organization size Technology capabilities Legal and compliance resources Financial soundness and fiduciary capability Asset/liability management synchronization Participant
Read More
Featured image for “Nonqualified Plans: Understanding the Fundamentals”
February 08, 2019

Nonqualified Plans: Understanding the Fundamentals

deferred compensation

Background: Since the passage of The Employee Retirement Income Security Act of 1974 (ERISA), companies have found it difficult to provide their top executives with a retirement accumulation program that matches the level of benefits the average employee will receive. The Gap is Real   This information is from the Principal Financial Group® Replacement Ratio Calculator with source information from the Annual Statistical Supplements to the Social Security Bulletin (www.ssa.gov). It is intended to demonstrate the potential impact of Social Security and 401(k) plan benefits at various income levels. For more information on your individual circumstances, please speak with your financial or tax professional. Nonqualified deferred compensation plans can serve an important function in helping to fill the significant gap between the combined amount of a worker’s social security retirement benefits plus his/her qualified retirement benefits and the amount of retirement savings he or she will need in order to replace current income. Regulatory Limits on Qualified Plans Drive the Need for Nonqualified Plans 401(k) limits executive contributions to $19,000 (2019) The maximum compensation eligible for qualified 401(k) or pension plan benefits is $280,000 (2019) As a result, many employers have established nonqualified plans to supplement their broad-based plans and, therefore,
Read More
Featured image for “#ICYMI Understanding Top Hat Plans”
January 03, 2019

#ICYMI Understanding Top Hat Plans

deferred compensation

Don’t Put Away Your New Year’s Eve Top Hat Just Yet! Over the past five-plus years of publishing Deferred Compensation News, (previously known as Fulcrum Partners News), no topic has ever attracted as many views or as much traffic as that of “Top Hat Plans.” In November 2018, the AALU Washington Report addressed some of the challenges and lack of clear guidance in identifying a company’s “top hat” group. Fulcrum Partners shared that information with its readers in a PDF suitable to download, print or read online. Because Top Hat Plans continue to raise discussion and cause confusion, we encourage you to download the report and then follow up with any member of the team at Fulcrum Partners should you have questions. As court cases have demonstrated, making sure you identify your top hat plans and appropriately limit eligibility in those plans can be important for avoiding significant litigation risk or ERISA (The Employee Retirement Income Security Act of 1974) fines. These three historic documents may also provide helpful insights: DOL Reiterates Its Stance on Top Hat Plans Electronic DOL Filing for Top Hat Plans to Be Mandatory “Top-Hat Plan” Exemption Compliance for Deferred Compensation Arrangements   Securities offered through Valmark Securities,
Read More
Featured image for “Deferred Compensation Plans: 4 Reasons Why They Matter, Year After Year”
December 20, 2018

Deferred Compensation Plans: 4 Reasons Why They Matter, Year After Year

deferred compensation

According to a report published last year by Principal Life Insurance Company, research continues to show that a deferred compensation plan plays a significant role in helping the plan’s participants reach their retirement goals. In fact, progress toward their retirement savings objective continues to be the primary motivation for plan participation. Additionally, reaching retirement savings goals plays the largest role in the employee’s decision-making process regarding how much he or she will contribute. Top 4 Reasons Why Employees Value Deferred Compensation Plans It’s still about saving for retirement. The capacity of deferred compensation plans to help key employees save for retirement continues to be the most important role of the plan and a main reason employees participate. Retirement income source. Half of the participants surveyed, view the plan as a source of income to be spent down during the early years of retirement. More than 20% of participants say that the plan will provide 25% or more of their retirement income. One in ten participants view the plan as their number one retirement income source. Flexibility in deciding how much to defer. The top factors key employees consider when determining an annual compensation amount to defer into the plan are
Read More
Featured image for “Fulcrum Partners News Becomes Deferred Compensation News”
November 15, 2018

Fulcrum Partners News Becomes Deferred Compensation News

deferred compensation

PONTE VEDRA BEACH, FL — (Nov 15, 2018) Fulcrum Partners LLC announces the rebranding of Fulcrum Partners News, which earlier this month became, Deferred Compensation News. Scott Cahill, Managing Director Fulcrum Partners Orlando and company cofounder said, “Since rebranding our blog, we have seen a remarkable 192 percent increase in readership year-over-year, which we attribute both to the rebrand and to the recent publication of high-interest topics related to updated IRS tax deferral guidelines and the always-complicated issue of Top Hat plans.” The blog and industry news platform began publication in September 2012 with the goal of providing information on deferred compensation and executive pay and benefit plans. Today, Deferred Compensation News brings readers a comprehensive overview of the latest updates on 409A nonqualified deferred compensation; institutional COLI, BOLI and ICOLI; tax-and cost-efficient non-COLI funding strategies; low-cost tax managed non-COLI asset/liability designs; executive benefits benchmarking; succession planning and timely issues of executive pay and benefits. Managing Director and company cofounder, Bruce Brownell added, “We understand that the information we cover is complex and is subject to change both with legislative action and with the economy. Deferred Compensation News offers answers and insights from the team at Fulcrum Partners and from other respected
Read More
Featured image for “Understanding Top Hat Plans”
November 08, 2018

Understanding Top Hat Plans

deferred compensation

Executive benefits consulting firm, Fulcrum Partners LLC, is pleased to distribute this AALU Washington Report to its clients and friends. You can read the full report here or download it as a PDF:  Top Hat Plans. This continuing series of articles is intended to provide deep insight into trends, events, and issues that impact the design and operation of nonqualified executive benefit plans. Top Hat Plans What Are They and How Do You Know If You Have One MARKET TREND: Recent case law continues to highlight the challenges, and lack of clear guidance, in identifying a company’s “top hat” group, but some common practices can be considered. As the court cases demonstrate, making sure you identify your top hat plans and appropriately limit eligibility in those plans can be important to avoiding significant litigation risk or ERISA (The Employee Retirement Income Security Act of 1974 ) fines. SYNOPSIS: Nonqualified deferred compensation plans (NQDC), such as 401(k) restoration plans, other elective deferral plans, and supplemental retirement plans (SERPs), must limit their eligibility to a “top hat” group to avoid significant problems under ERISA and the Internal Revenue Code (IRC). ERISA defines this group as a “select group of management or highly
Read More
Featured image for “How Can Deferred Compensation Plans Help Keep Companies Strong?”
October 18, 2018

How Can Deferred Compensation Plans Help Keep Companies Strong?

deferred compensation

A nonqualified deferred compensation plan is designed to help top talent save beyond 401(k) plan limitations for retirement and other savings goals, while helping the organization recruit, retain, and reward them. Here’s How Deferred Compensation Plans Work A deferred comp plan is a type of savings vehicle an organization provides to select key employees. Participants can defer a portion of their annual compensation or bonuses into the plan before taxes. And the organization promises to pay that money to the employees at a future date, plus any earnings or additional contributions the organization may offer. How a company informally finances its plan can help accomplish these goals – whether the company uses corporate owned life insurance (COLI) or taxable investments, or company cash flow. Helping key employees save additional dollars for the future with a deferred comp plan is a great way for companies to tie these employees to the organization, while keeping it strong and successful. Read or download these Reports for more information on Deferred Compensation Plans Protect Your Clients by Helping Them Look Out for Their Key Employees Recognize and Motivate Key Employees: Nonqualified Incentive Bonus Plan How Deferred Comp Plans Can Help Pass-Through Businesses Key Employee
Read More
Featured image for “#ICYMI Recognize and Motivate Key Employees with a Nonqualified Incentive Bonus Plan”
October 09, 2018

#ICYMI Recognize and Motivate Key Employees with a Nonqualified Incentive Bonus Plan

deferred compensation

In case you missed this insightful report… Download a copy of the report here Recognize and Motivate Key Employees with a Nonqualified Incentive Bonus Plan or view it on the Fulcrum Partners “Alliance” webpage. Fulcrum Partners has published a new report designed for organizations and their CPAs and financial advisors. The report, titled “Recognize and Motivate Key Employees” explains what a nonqualified incentive bonus plan is and how a plan can help organizations retain and reward employees essential to the company’s success.  The report also looks at how experienced guidance helps organizations and their key employees through this process. As high as 71% of plan participants would recommend participation in a nonqualified incentive bonus plan to other eligible employees.1 1Based on research in the 2017 Trends in Nonqualified Deferred Compensation, published by Principal Life Insurance Company, a member of Principal Financial Group. Nonqualified Incentive Bonus Plan Design The following is an excerpt from the report: “Employers are in control of making the plan their own, because the plan is always based on the specific goals of the organization and unique needs of its key employees. Together, the employer and the financial professional walk through the decisions that need to be made to
Read More
Featured image for “#ICYMI Fulcrum Partners’ Video Clip for Executive Compensation Data”
August 14, 2018

#ICYMI Fulcrum Partners’ Video Clip for Executive Compensation Data

deferred compensation

In Case You Missed It: “Is Your Pay Structured for Lifetime Optimization?” is a newly released video clip from Fulcrum Partners. The 30-second video was developed to preview the type of executive compensation benefits benchmarking data and Retirement Income Replacement Ratio (RIRR) charts that Fulcrum Partners personalizes for executives and organizations. Fulcrum Partners makes customized benchmarking comparison tables easily available to executives and organizations, either upon request, or in many cases, already created and presented on a personal webpage. Each page includes the executive’s retirement income replacement data and comparison charts that show, by name, the benefits data of between three and ten of the executive’s peers. Fulcrum Partners managing director, Steve Broadbent, explained, “A PURL shows an executive’s compensation data and helps the executive or organization evaluate whether the executive’s benefits are optimized over his or her lifetime. And we’ve automated the process, so if the charts have not already been produced, we can quickly provide them on request.” Although Fulcrum Partners is direct emailing a PURL weblink to many top executives from companies within the Russell 3000, companies or executives can also request their data. Visit, https://www.fulcrumpartnersllc.com/r3k/search/ to find a PURL personal webpage or contact Fulcrum Partners at 407.841.2480 and
Read More
Featured image for “Retaining Employees that Are Key but Are Not Highly Compensated”
June 26, 2018

Retaining Employees that Are Key but Are Not Highly Compensated

deferred compensation

Companies in a variety of industries such as construction, auto dealerships, or manufacturing, for example, are finding that retaining and motivating key employees is essential for the company to remain both stable and competitive. In some cases, although the employees are key to the organization, they do not meet the top hat definition of, “a select group of management or highly compensated (workers).”  When this is the case, a nonqualified deferred compensation plan (NQDC) is not a viable option for retaining and rewarding these employees. In such situations, alternate plan designs can be utilized. Case Study: A full-service logistics company with 150 employees considered its workers as part of evaluating its value proposition. Among the employees, a group of twelve workers were identified as key to business operations. The company sought a way to better retain these valued workers. Within the group of twelve, three employees were highly compensated, but the remainder were not, which limited plan design choices. Using a Nonqualified Incentive Bonus Plan, the company was able to motivate and reward the select group with contributions based on revenue metrics and to retain them with a vesting schedule. Other features that added value to the plan were: Tax
Read More