Keep the people your company cannot afford to lose.
The retention architecture Fortune 500 companies use for their leadership, designed for the business you own. Reward the few people who drive your results, tie them to your goals, and turn the cost into an asset.
Matches and bonuses do not buy loyalty.
A 401(k) match is the same for everyone, and a cash bonus is spent by spring. Neither gives your best people a reason to stay, and neither gives the company anything back when they leave.
Meanwhile your highest earners hit qualified plan limits early in the year, and competitors know exactly who to call. Replacing a key leader can cost a year's salary or more, before you count the clients and projects that leave with them.
A golden handcuff your people actually want.
Key leaders defer part of their pay into a plan the company designs. Benefits vest on a schedule you choose, so staying is rewarded and leaving early costs them the unvested balance.
The plan is typically funded with company owned life insurance, which can be carried on the balance sheet and can help the company recover the plan's cost over time.
Four advantages a 401(k) cannot offer.
The retention protocol
Vesting schedules built to keep key people for seven to ten years or longer.
Selective by design
Offer it only to the select group of leaders and highly paid employees you choose.
Beyond the 401(k) limit
Executives can defer compensation above qualified plan limits, with tax generally due when it is paid out.
The asset shift
Informally funded with company owned life insurance, the plan can sit on the books as an asset, not a sunk cost.
- Founders and owners whose results depend on a handful of people.
- Professional and medical groups competing with larger employers for talent.
- Companies planning a sale or succession who need leadership to stay through it.
- Plans must be documented to comply with Section 409A of the tax code. We coordinate this with your attorney.
- Deferred amounts are general obligations of the company until paid.
- Plan design, funding and accounting treatment vary by company and are reviewed with your CPA.
Before you decide.
Who can participate?
A select group of management or highly compensated employees, chosen by the company. Your attorney confirms eligibility as part of the plan documents.
Is it subject to ERISA like a 401(k)?
Plans limited to this select group are exempt from most ERISA requirements, including the participation and funding rules that govern a 401(k). They still need proper documents and a short filing with the Department of Labor.
What happens if an executive leaves early?
Unvested benefits are forfeited under the schedule you set, and stay with the company.
What does the company need to do?
Approve the design, fund the plan as designed, and let us coordinate the documents with your attorney and CPA.
Do I need experience with compensation plans?
No. We explain the structure from first principles and assume you are evaluating it for the first time.