Supplementary Employee Retirement Plans (SERPs)
High Performing employees are linked to the success of a company’s growth. A leading group of best-in-class companies is looking for high impact strategies to retain top talent in today’s market place.
Employer-sponsored pension plans are gaining in popularity. These plans can provide generous tax incentives and rewards for employees to save for retirement.
A SERP, which is designed for highly compensated employees, can be a cost-effective option because business owners only need to include key executives in this plan.
Benefits of a SERP for the business:
- Can be tailored to each executive selected to participate
- Can be designed with a vesting provision
- Benefits are tax deductible to the business when paid
Benefits of a SERP for the executive:
- Retirement benefits in addition to government sponsored Social Security and qualified retirement plans.
- Benefits are not taxable to the executive until received.
- May provide pre-retirement survivor benefits for executive’s beneficiaries.
- Plan may allow for any remaining retirement income to be paid to the executive’s beneficiaries after death.
When creating a SERP for owners, Corporations are typically able to recognize more of the SERP’s tax advantages than pass-through organizations. Partnerships and S Corps will generally limit SERPs to minority owners or employees for tax purposes.