Practices

Supplemental Retirement Plan - Funding and Benefits

An integral part of providing supplemental retirement benefits to executives is determining the appropriate funding to achieve the planned benefit.  While funding is not required for non-qualified retirement benefits, most organizations prefer to calculate the required funding level and set aside the necessary funds.

 

IHStrategies recommends completing this analysis at the commencement of any new retirement program and a minimum of once every three years thereafter.   Our work steps include some or all of the following:

 

  • Collection of:
    • Retirement plan documents and summary plan descriptions
    • Retirement plan participant demographics
    • Qualified plan balances
    • Supplemental retirement plan historical funding contributions
  • Calculation of:
    • Projected benefits for applicable offsets - qualified and non-qualified plans
    • Estimated funding for the supplemental retirement plan based on the projected benefit at retirement less any benefit offsets

 

Completing these calculations assists in avoiding retirement funding shortfalls.  This analysis results in not only the ability to appropriately plan for benefit payment, but also enhances executive perception and security regarding receipt of the future benefit.