Pension Benefit Guaranty Corporation 

Traditional Defined Benefit Plans

Money Purchase Plans

The Future of Retirement Plans

Types of Defined Benefits Plans

What is a Defined Benefit Pension Plan?

Deferred Compensation Plans Pros Cons

Life insurance offers financial protection for billions of people all over the world. Life insurance policies are not only purchased by individuals, but they are also purchased by numerous companies and institutions, as they use these policies for multiple purposes, such as, to offer liquidity. Nevertheless, the rules relevant to corporate ownership of life policies are a lot more complicated than the ones for individuals.

Types Of Deferred Compensation Plans

As a successful business owners, you hold a certain level of interest in protecting your current assets while simultaneously continuing to grow your personal wealth. Similarly, you value the livelihood of your employees, from the top-level management executives to the lower-tier associates. Although you would like all of your employees to be able to receive benefits and plan for their retirement, however, it may seem unfair to reward entry-level workers with the same type of compensation as those professionals who have been working by your side and proving their loyalty for years. It is for this very reason that business owners have the option of choosing between the two main types of deferred compensation plans - qualified or non-qualified programs.

What Are Deferred Compensation Plans?

Let’s say you are the owner or President of a Fortune 500 company, or other corporation that operates with a large amount of capital in a highly-competitive industry. You have a team of highly-compensated IT executives who provide the blanket security for your entire enterprise, and are largely responsible for keeping in check the sanctity of your network, and keeping you near the top or at the top of your niche. The issue is, if this select group of employees are so very good at their jobs, and your industry is really competitive, then you may not be able to retain them very easily with a selection of insurance or investment vehicles available to the general workforce.

In the high-end corporate world, there are multiple kinds of life insurance available for high-income employees; such as Bank Owned Life Insurance, Section 162 Bonus Plans, Corporate Owned Life Insurance and robustly compensatory non-qualified deferred compensation plans (NQDCs). Are there any insurance policy analogs that enjoy tax-deferral status – as well as some of the benefits provided under ERISA guidelines – for the more pedestrian employee? It turns out that the 457 plan is just such an option; and, after the insurance reform instituted by the Economic Growth and Tax Relief Reconciliation Act of 2001, has enjoyed a timely relaxation of restrictions that plagued its former constitution – and is now more in line with the popular 401(k) plan.