A SERP is a benefit you can offer to provide retirement income for a group of key employees.
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SERPs offer key employees another retirement benefit
As the employer, you’ll have the flexibility to choose either a fixed-dollar benefit amount or a formula-based benefit amount for your employees, based on participant compensation and/or years of service. You can also design the plan to provide reduced benefits if the employee separates from service before retirement age. You can even match employee contributions for additional tax breaks and more of a reward.
Potential employee benefits
Taxes on income are deferred until the employee receives distributions
There are no required minimum distributions at age 70½
Employees may take distributions before age 59½ without penalty
Plan has an easy-to-understand formula driven benefit
Potential employer benefits
You can choose the employees that participate
The company can recover out-of-pocket costs through the life insurance death benefit
The employee’s benefit is predictable for retirement and accounting purposes