Supplemental Executive Retirement Plans (SERPs)

How These Plans Work
  • Only for-profit corporations are allowed to maintain this type of plan
  • The plan must cover only a select group of management or highly compensated employees
  • The assets of the plan must remain assets of the company sponsoring the plan and are not protected from general creditors in the event of bankruptcy
  • Typically this type of plan is set up to provide benefits over the limits that apply to pension plans, 401(k) plans, profit sharing plans, money purchase pension plans or ESOPs
  • The plan can operate like a defined contribution plan with individual accounts for each employee in the select group
  • The plan can operate like a defined benefit plan, supplementing other company sponsored retirement benefits
  • The company receives no tax deduction when it makes contributions to the plan but does receive a deduction when distributions are made
  • Distributions are subject to ordinary income tax; rollovers to IRAs or other employer retirement plans are not permitted
Things To Note
  • If the plan only covers a select group, it is exempt from nondiscrimination rules, reporting, disclosure and fiduciary responsibility rules of ERISA
  • The company can deposit plan assets into a rabbi trust to provide some protection from a change in management or corporate ownership
What We Can Do
  • Evaluate your objectives and recommend possible plan designs
  • Consult with you on regulatory changes and emerging trends
  • Assist in vendor searches to find service providers for your plan
  • Provide daily valuation or traditional recordkeeping for your plan
  • Calculate the annual FAS 87 expense for inclusion in the company’s financials
  • Prepare the annual FAS 87 financial statement disclosure
  • Prepare the one time notification to the Department of Labor in order to obtain exemption from filing annual Form 5500 and other reporting and disclosures
  • Help you prepare employee communications
  • Prepare plan documents and plan amendments
  • Assist you with any IRS or DOL audit of your plan