Financing and accounting for the nonqualified 401(k) wrap-around plan
Article Abstract:
An Executive Nonqualified Deferral of Income Plan provides the same benefits to executives as a qualified 401(k) plan but allows for unlimited income deferrals, eliminated from qualified plans to avoid discrimination. The deferred income accrues untaxed income so the net worth is higher than other investment opportunities. However, the plan is secured by the corporation and so depends on its financial stability. In addition, corporations cannot deduct the costs until distribution, usually at retirement, but can recover costs by funding the plan with a key man life insurance policy.
Publication Name: Journal of the American Society of CLU & ChFC
Subject: Law
ISSN: 1052-2875
Year: 1992
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Take care of your second most valuable asset
Article Abstract:
Nonqualified benefits plans often make up 75% or more of highly paid executives' retirement benefits because of tax law changes that have reduced their eligibility for qualified plans. However, executives need to be aware of the risks involved in such plans both pre-retirement and post-retirement from insolvency, mergers and market conditions because the plans are not protected under law. These plans are also subject to income and estate taxes. Executives need to be aware of funding techniques to minimize risk as well as planning techniques to maximize benefits.
Publication Name: Journal of the American Society of CLU & ChFC
Subject: Law
ISSN: 1052-2875
Year: 1992
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GEBA: the executive compensation answer
Article Abstract:
The Golden Executive Bonus Arrangement (GEBA) is designed to enhance executive compensation, provide incentives to remain with the organization and maximize tax advantages. It combines a Section 162 Bonus plan, a restrictive endorsement applied to the insurance contract and an employment contract. The employer can deduct the full amount of the bonus under Section 162(a)(1). Because it involves an individually negotiated contract, ERISA requirements do not apply.
Publication Name: Journal of the American Society of CLU & ChFC
Subject: Law
ISSN: 1052-2875
Year: 1992
User Contributions:
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