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Treat Me Right! Build a Supplemental Executive Retirement Plan for Your Executive Employees

April 16, 2024 (3 min read)

Supplemental Executive Retirement Plans, or SERPs, are structured to avoid most rules that apply to qualified plans that limit the ultimate benefit that can be derived from the plan. SERPs are simply contractual promises to participants to pay an amount to them in the future (in the payment form(s) provided under the SERP). The SERP may be structured as an account balance plan and provide supplemental defined contribution plan benefits or otherwise supplement (as an accrued benefit) an individual's qualified defined benefit plan benefits. 

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Related Content

  • Top Hat Plans
    Draft your SERP (also known as a top-hat plan) so that it limits the risk of employee litigation against the sponsoring employer and avoids the consequences of IRS or DOL audits.
  • Supplemental Executive Retirement Plan Design and Guidance
    Learn more about SERPs as a supplement retirement benefit tailored to an executive population. SERPs and other top-hat plans are exempt from most ERISA and IRC requirements that apply to qualified retirement plans. They are subject to IRC Section 409A, so careful drafting is essential.

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.    

  • Employee Benefits & Executive Compensation Key Legal Developments Tracker (Current)
    Stay informed on new developments.
    • Retirement Plans. DOL’s Employee Benefits Security Administration division finalized amendments to Class Prohibited Transaction Exemption 84-14 (Qualified Professional Asset Manager Exemption or QPAM) which permits various parties related to employee benefit plans and IRAs to engage in transactions involving plan and IRA assets, provided they satisfy specified financial standards. The amendments respond to substantial changes in the financial services industry since the exemption’s 1984 establishment. 89 Fed. Reg. 23090 (April 3, 2024); DOL News Release.
    • Retirement Plans. Agencies finalize regulations that significantly reduce the window for short-term, limited-duration health insurance, from three years to no more than four months, refraining from more sweeping changes set forth in proposed regulations that would have affected fixed indemnity insurance. 89 Fed. Reg. 23338 (April 3, 2024).
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