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Non-Qualified Key
Executive Compensation
A special benefit
program can be established for your key executives. Executive compensation
is ideal for highly compensated executives who find themselves in higher
tax brackets with each additional raise or bonus. Such a plan defers income
from the peak earning years to some future date, usually retirement, when
the highly paid executives are likely to be in a lower tax bracket. The
result may be far more after-tax income than the executive would enjoy
otherwise.
A Non-Qualified Retirement
Plan is life-insurance based. Set forth below are points of comparison
between a Simple IRA, a Simple 401 (k) and a life-insurance based plan:
| |
|
IRA |
401(k) |
Life Ins. |
| 1. |
Can annual contributions
exceed $4,000? |
No |
Yes |
Yes |
| 2. |
Are contributions
tax-deductible?
|
Maybe |
Yes |
No |
| 3. |
Do funds accumulate
income tax deferred?
|
Yes |
Yes |
Yes |
| 4. |
Are annual
plan administration costs avoided?
|
Usually |
No |
Yes |
| 5. |
Can withdrawals
be made before age 59 ½ for any reason without penalty?
|
No |
No |
Yes* |
| 6. |
Is the amount
of benefits unlimited by the tax law?
|
No |
No |
Yes |
| 7. |
Can the fund
be used as collateral for a loan?
|
No |
No |
Yes |
| 8. |
Are withdrawals
tax-exempt at retirement?
|
No |
No |
Yes** |
*Under certain circumstances
the IRS may declare it a Modified Endowment Contract (MEC) which may incur
a penalty.
**Withdrawals are exempt up to the basis or up to the investment in the contract.
To set an appointment
to discuss your individual situation, please call us at (800) 925-2050.
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