Clients can create special nonqualified retirement plans to solve problems unique to executives. Nonqualified plans can allow executives to voluntarily defer their own income until retirement or until some other future time. Or they can provide a vehicle for the company to put additional funds aside for the benefit of the executives impacted by limitations imposed on qualified retirement plans or make up for limits imposed on group life and disability plans.
Specialized plans enable executives to receive benefits above and beyond those provided to all employees, and even provide an element of portability that is not possible under the group plan. These plans can also be used to mitigate the negative effects of taxes imposed on employees receiving life insurance coverage above the levels specified in the IRS code.
Over the years we've seen certain problems crop up on a regular basis. Though common, the following short list of pitfalls often have innovative and even bold solutions that turn blunders into opportunities. In some cases they can be avoided entirely.