“Oh, I see now why you kept telling me this every year”. When the lightbulb goes on for a client, and you hear those words, it’s a very rewarding feeling.
You see, there are times where we lay the groundwork for years without much fanfare. Consistently making good decisions to avoid future potential issues. Just like creating an impressive building, when amassing wealth, you need to make smart design choices early and often.
So, when it comes to maximizing executive benefits, you’ll be greatly impacted by the groundwork laid over years’ past. One area that this is particularly true is within your executive deferred compensation plans (sometimes referred to as SRAPs or Deferred Comp.), and if you are considering leaving your current employer you need to listen closely. Features of these plans make them different from traditional retirement plans and it is critical for executives to plan ahead for this.
A few key considerations include:
- Yes, these are tax deferred plans but NO they are not the same as traditional retirement plans. As a result, smart planners plan accordingly!
- Distributions will start when you separate from your employer, so be sure to plan ahead for tax considerations.
- Typically, you only get one chance to choose the frequency of those payments.
- Deferred compensation plans are assets of the firm and if there is a bankruptcy, plan participants are unsecured creditors so “buyer beware”!
The reality is that deferred compensation plan management is a skill unto its own that most executives know is important but don’t typically have the appetite to master for themselves. It’s common for highly successful executives to come to Spurstone with this similar concern, knowing they could be doing more for their wealth but having pushed a lot of it to the back burner due to their busy lives. Where we step in is to aide in laying all this groundwork, pre-planning and designing solutions while you focus on making your own time the most valuable.
Executives trust us to be smart and do it right without all the sales and games they may have gotten elsewhere. If this applies to you, I’d encourage you to check out our 10Ex Executive Wealth Audit and see how you might be able to make improvements and gain some peace of mind as well. Also, don’t hesitate to reach out to our team for help and insights. If you would like to schedule a complimentary 15-minute consultation call with me, please click the link below.