Our strong economy and tight job market can expose companies to a higher risk of losing key talent.  As your company evaluates 2019’s performance awards this quarter, it’s a great time to revisit organizational priorities and the needs a Nonqualified Deferred Compensation (NQDC) plan may be able to address:

Retention — Making it appealing for key talent to stay with your organization by recharacterizing certain bonuses as long-term incentive with vesting schedules.

Rewards — Driving organizational results and key employee performance by offering meaningful incentive-based contributions into a long-term incentive plan.

Recruitment — Attracting key performers to your organization through signing and/or stay bonuses tied to a fixed tenure period or business objectives.

Retirement — Supporting retirement preparedness by restoring otherwise lost company match benefits resulting from qualified plan testing and/or compensation limits.

 

A Win-Win Solution

Well-designed employer contributions to a deferred comp plan can help address these concerns.  Employers have more flexibility in addressing their organizational needs since NQDC plans aren’t subject to ERISA coverage, anti-discrimination and vesting requirements.

Where NQDC stands out is it’s versatility – the ability to maintain flexible company contributions and design custom-tailored vesting schedules aligned with your organization’s priorities.  As an example, rolling vesting on each award is a modern approach that allows participants to attain vesting milestones more often for a “wins along the way” experience, helping with retention and keeping executives engaged for the next vesting milestone.

To alleviate the concerns of paying out a strong performance bonus on a Friday only to see a talent exit the following Monday, consider the key Win-Win benefits of contributing this year’s incentive awards into a deferred compensation plan. You will enhance the overall benefit to key people through pre-tax awards and enjoy more control over incentive pay than traditional bonus compensation.

Let’s connect and get creative!

Casey Rouse, casey@rousesolutions.com, 952.297.1780

Insurance services provided through Rouse & Company. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Kestra IS and Kestra AS are not affiliated with Rouse & Company. This site is published for residents of the United States only. Registered Representatives of Kestra Investment Services, LLC and Investment Advisor Representatives of Kestra Advisory Services, LLC, may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. Neither Kestra IS or Kestra AS provides legal or tax advice. For additional information, please contact our Compliance department at 844-5-KESTRA (844-553-7872). Check the background of this firm on FINRA’s BrokerCheck.