401k Mirror Plan
The impact of legislation on qualified retirement plans has effectively penalized highly compensated executives by reducing their retirement benefits from a qualified plan and social security to a smaller percentage of their pre-retirement income.
As an employer looks for ways to attract and retain top performers, the highly compensated executive seeks opportunities to save a portion of their income for retirement on a "before-tax" basis. The 401k Mirror Voluntary Deferral Plan can provide a solution for both.
The 401k Mirror Plan is an employer-sponsored non-qualified retirement plan. Through a written agreement with the employer, an executive elects to defer a portion of his/her future income, bonus, or both in exchange for supplemental retirement income. As an added bonus for the executive, the employer may agree to match the executive's deferrals.
Key Benefits for the Employer:
- Attract and retain key executives;
- Limit participation to executives;
- Control the plan and any underlying investments;
- Under certain designs, the costs associated with the plan may be recovered at the executive's death.
Key Benefits for the Executive:
- Defer income on a pre-tax basis at amounts in excess of qualified plan limitations;
- Accumulate tax-deferred for retirement;
- Potentially receive additional retirement income through any employer match.