Employee Deferred Compensation Account Plans

These plans are 100% employer funded plans, have flexible vesting schedules that can be 100% vested on day one or set up to only vest at death, retirement, or change of control.  Because these plans are employer paid, they have the ability to discriminate by participant or class, and can have different benefits levels that are:

• formula based
• performance based
• incentive based, or
• Based upon some combination of all of the above

From a funding stand point, the employer may choose a market based product or a fixed interest product.  Because of the volatility in the market in the last decade though, some of our employers have recently started to select fixed interest account products that provide principal security and a steady interest rate return.  While the interest rates may fluctuate monthly or annually, the employer’s principal is only at risk based upon the underlying carrier that issued the product.  From a plan performance perspective, if the employer can limit its market risk by only offering a fixed interest account, the employer can limit its out of pocket cash flow while providing a very meaningful benefit to plan participants.  In many of these plans, the executives look at the benefits as their “fixed income account” of their retirement assets.

Employee 401K Mirror
Employer Plans
Employer SERP Plans
FAQs