Benefits testing: the dawn of a new day for defined contribution planning

Article Abstract:

Section 401(a)(4) of the Internal Revenue Code offers employers a chance to employ benefits tested plans that can provide a disproportionate share of an employers' contribution to a limited number of employees, owner included. The two types of benefits tested plans to choose from are age-weighted plans and new comparability plans. These plans are especially beneficial to businesses that wish to compensate executives with seemingly illegal amounts of plan contributions, companies where the income disparity between old and young workers is large and small to mid-size employers.

Innovations, Employee benefits, Defined contribution plans

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Deferred compensation insurance

Article Abstract:

Deferred compensation insurance secures an employer's promise to pay employees their nonqualified deferred compensation benefits. As such, it can serve as an effective tool in securing benefits for retirement. There is not much guidance available on the issue, but the IRS should soon show how deferred compensation insurance should be structured to avoid income taxation of the insured benefits.

Analysis, Compensation and benefits, Pension funds, Executives, Executive compensation, Insurance, Deferred compensation

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