MKA Executive Planners Blog

What has happened to retirement benefits?  Defined benefit plans have gone the way of the horse and buggy; 401(k) and 403(b) plans only do part of the job; traditional non-qualified plans are subject to employer insolvency, 409A design limitations and, in many cases, long term vesting or forfeiture provisions.  Cash is nice, but with the public hungry to focus on large salaries and Boards feeling governmental, regulatory and public pressure, what is one to do?

Whether you are a taxable entity or a tax exempt organization, there is a solution to the reverse discrimination that falls upon “highly compensated” executives and professionals.  What is this reverse discrimination?  Social Security contributions stop at $110,000 of salary wage base for 2013 and the benefit is calculated on an even lower number – the average of the last 35 wage bases.  It was well under $100,000 for most of the last 35 years.  For qualified plans, the maximum salary that can be used to determine benefits or contributions for 2013 is $255,000.

How about a plan that works for both employers and employees?  One that is free of nearly all government regulation and fiduciary responsibility.  One that:

• Can be designed with a non-qualified defined benefit, defined contribution or target benefit formula
• Permits the employer to pick and choose participants outside of ERISA limits (not limited to a select group of management or highly compensated employees)
• Permits the employer to determine contributions by group, by position, by salary
• Permits the employer to add to contributions for recruitment or other purposes
• Permits the employer to adjust contributions year to year – even skip them in bad years
• Permits the employer to set vesting; no government rules
• Shifts investment responsibility to the participant – or looked at the other way, the participants make the investment decisions for their own program
• Permits the participant to make personal contributions
• Cost is essentially the same as similar benefits in qualified plans
• For the not for profit, Form 990 disclosure is materially less intrusive than 457(f) and 457(b) plans

The program is consistent with the Internal Revenue Code and Internal Revenue Service guidelines. 

For further information, contact Barry N. Koslow, JD, at bkoslow@mkaplanners.com or 781-939-6050.

Securities offered through Advisory Group Equity Services, Ltd., Member FINRA/SIPC.  444 Washington Street, Woburn, MA 01801 (781) 933-6100. 

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