Today's Executive Benefits Plans Provide Big Bang for Buck, Longfellow Advisors' Silva Writes

BOSTON, MA--(Marketwire - Jan 4, 2012) - Today's leaner, more cost-effective executive benefits plans are back as a key strategic weapon in the talent-recruitment war, Lisa E. Silva of Longfellow Advisors, Boston, writes in the September issue of Employee Benefits Plan Review.

"While the benefits aren't as lavish as they used to be, they're still compelling, and the costs to employers are much lower," she writes.

Supplemental disability insurance
With group long-term disability policies, the maximum monthly benefit caps vary between $5,000 and $15,000. Most executives are underinsured because they're falling far short of the recommended 60% income replacement ratio.

Supplemental long-term disability programs use individual contracts so the premiums remain level for the life of the policy and the coverage is fully portable. When enough executives sign up, multi-life discounts and guaranteed-issue coverage are available.

Deferred Compensation Plans
Deferred compensation plans are nonqualified programs allowing executives to defer their own dollars into a pre-tax, tax-deferred savings vehicle.

"Unlike a 401k plan, the deferred compensation account can be used to meet both short- and long-term savings goals," she writes. "Because the plan is nonqualified, there are generally no federal limitations on the amount one can contribute and there is no early withdrawal penalty before age 59 1/2."

For a modest cost, a program can provide a powerful lure to attract and retain key executives. Most plans are funded through corporate-owned life insurance. An advisor should complete a financial model to determine which option would work best, Silva writes.

Core Buy-Up Long-Term Care Insurance
Here, the employer agrees to purchase a minimal base benefit for all eligible employees. Employees can "buy-up" additional coverage at their own cost, Silva says.

"The employer contribution eliminates the minimum participation requirement found in most voluntary plans, which is often a large hurdle in creating a program," she points out.

The article is "Today's Leaner Executive Benefits Plans: Still a Powerful Recruitment and Retention Tool."

Silva, CLU, is senior vice president, executive benefits, with Longfellow Advisors (www.longfellowadvisors.com), a consulting firm in Boston that provides a wide range of executive and retirement plan services. She can be reached at lesilva@lf-adv.com. Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through Independent Financial Partners (IFP), a registered investment advisor and separate entity from LPL Financial. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.