American Benefit Corporation
Designing Flexibility into a Deferred Compensation Plan American Benefit Corporation specializes in developing strategic solutions to executive benefit needs.
At American Benefit Corporation, we design, fund and manage executive non-qualified benefit plans for highly compensated corporate executives who wish to reduce current income taxes and form personal capital on a tax efficient basis. Established more than 30 years ago, we serve the unique needs of executives in numerous corporations with their personal capital formation objectives.
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American Benefit Corporation and its representatives are presently licensed to operate in particular states of jurisdiction and may operate only where licensed and, with regard to any particular product, where that product has been approved. American Benefit Corporation and/or James W. Herlihy are currently licensed to market insurance and investment products in Arizona, Connecticut, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Vermont.
The insurance and/or investment product information on this site is not intended for distribution or use in any states or jurisdictions where our company, its products, or representatives are not so licensed or approved.
Securities offered through M Holdings Securities, Inc. A Registered Broker/Dealer, member FINRA/SIPC. American Benefit Corporation is independently owned and operated.
American Benefit Corporation is a member of M Financial Group. Please go to www.mfin.com/DisclosureStatement for further details regarding this relationship.
Featured Case Study
Reduce Turnover With Corporate Match
A large east coast grocery store chain employed pharmacists in each of their stores. They were experiencing 40% turnover each year within this group and wanted a benefit plan that would increase their retention.
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Designing Flexibility into a Deferred Compensation Plan
An executive participant in a non-qualified deferred compensation plan is a general unsecured creditor of the corporation. For this reason corporations that are not financially secure should not offer a non-qualified plan. However, corporations that are financially secure at plan implementation may weaken and the executives will develop a concern for the security of their money. Many companies adopt a "Rabbi Trust" to protect the deferred compensation funds from change of control or change of heart issues. However, a Rabbi Trust affords no bankruptcy protection.
Building flexibility into the plan design and giving executives the opportunity to withdraw their funds at a certain predetermined time reduces, but does not eliminate, the financial risk.
In the plan design that follows, executives are scheduled to get a full distribution from their account balance every fifth year. To avoid this distribution, the participant must notify the plan administrator thirteen (13) months in advance of the scheduled distribution date (IRC 409(A)) that he/she wants to elect against the distribution and defer payment at least another five years. Five years hence the process is repeated until the participant retires or elects to take the funds.
IRC 409(A) provides good guidance in support of this plan design structure.
Securities offered through M Holdings Securities, Inc., a Registered Broker/Dealer, Member FINRA/SIPC. American Benefit Corporation is independently owned and operated.