MKA Executive Planners Blog

While many, if not most, supplemental retirement agreements (SERPs) and deferred compensation arrangements do not require the participating executive to sign a release in order to receive payment, many employment contracts along with other agreements tied to compensation, employment or severance often do.  If you have a SERP or deferred compensation arrangement or another agreement that has a requirement to sign a release at separation from service you could be caught in a huge tax trap.

A senior executive or physician earning $250,000 or more at retirement is likely to receive less than 30% of her final pay as a retirement benefit from her employer’s retirement plan and Social Security.   It is not unusual for us to find retirement benefits from employer dollars in the 20 to 25% range of final salary.  At the same time, the average employee’s retirement benefit is likely to be at 50% or more of final salary.