Nonqualified and executive retirement plans

Optimizing Foundations values and administers supplemental executive retirement plans, excess benefit plans and nonqualified deferred compensation arrangements, and advises on the questions around them: how to fund them, what happens on a change in control and how they interact with the company's qualified plans.

What is included

• Valuation and accounting. The obligation and annual expense under ASC 715 for defined benefit SERPs and under the applicable guidance for account-based plans, with disclosures and year-end remeasurement.
• Design. Benefit formulas that restore what the qualified plan limits take away, vesting and forfeiture provisions and the distribution timing rules required under Section 409A.
• Change in control. The cost of accelerated vesting and payment on a transaction, the Section 280G excess parachute payment calculation and the excise tax exposure for the executive and lost deduction for the company.
• Funding. Rabbi trusts, corporate-owned life insurance and informal funding compared with leaving the obligation unfunded, with the accounting consequences of each.
• Administration. Benefit calculations, participant statements, election tracking under Section 409A and the FICA timing rules for nonqualified benefits.

How the work runs

The firm reviews the plan documents and employment agreements first, since the obligation is often defined across several of them. Valuation and administration then follow the same annual cycle as the company's qualified plans, with results delivered together.

Common questions

Can a SERP be terminated or frozen? Yes, within the Section 409A rules on plan terminations and the plan's own provisions. The firm models the cost and timing with the company's counsel.

Do nonqualified plans file a Form 5500? Top-hat plans file a one-time registration statement with the Department of Labor rather than an annual Form 5500. The firm confirms the filing status for each plan.

Every deliverable described here is reviewed by a second credentialed actuary before delivery. This page is general information about the firm's services and is not advice for any specific plan.