When You Think Pensions, Think Executive Benefits!
Actuaries and Benefit Consultants
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Our Business
We at Executive Benefits Design Group realize that no one plan can work for every situation, so we offer a wide range of plans that can be customized to suit the specific needs of your company.
Among Our Clients
Accounting Firms, Architectural Firms, Construction Companies, Financial Institutions, Law Firms, Medical Corporations, And Many More
Fully Insured Defined Benefit Plans
Fully Insured Defined Benefit Plans are defined benefit retirement plans. The Fully Insured Defined Benefit Plan, offers retirement benefits funded with insurance products. The plan is funded with life insurance and annuity products or annuities only. A Fully Insured Defined Benefit Plan has less funding flexibility than a traditional defined benefit plan, but this enables the plan to provide the maximum tax deduction available under any qualified plan, and provides guaranteed security.
Policies must remain in force, requiring annual contributions, and participant loans are not permitted. In addition, plan funding is expected on the first day of each plan year.
Fully Insured Defined Benefit Plans are not subject to the minimum funding standards of ERISA and it is not required to engage an actuary to certify contribution requirements. Fully Insured Defined Benefit Plans provide the highest level of benefit security for individual participants and for the business owner.
401(k) Plans
A 401(k) plan is a defined contribution plan where employees can elect to defer a portion of their annual compensation that is deposited in the participant´s account. These plans always provide for employee deferral accounts but may also provide accounts for employer contributions.
Employer contributions may be in the form of a matching contribution based on what the employee defers, or they can be based on a formula, or even both. Because 401(k) plans are profit sharing plans, the employer is not required to make annual contributions.
In a typical 401(k) plan, employees are in charge of making investment decisions and bear the investment risk. The risks associated with managing an account balance during retirement and possibly outliving the assets is a disadvantage.
Defined Benefit Pension Plans
A defined benefit plan provides a predetermined, level amount of benefit payments for the life of the participant or the life of the participant and spouse. The retirement benefit is calculated using a formula specified in the plan. The benefit formula may take into account service or pay or both. Benefit formulas can also take into account Social Security benefits.
One advantage of defined benefit plans is that they can be designed to meet specific income replacement objectives. They can also be structured to provide ancillary benefits, such as death and disability benefits, which are often more valuable than the earned portion of a retirement benefit.
Since a defined benefit plan provides lifetime annuities, employees are protected from the risk of outliving their pension assets. Also, employees do not have to make investment decisions and do not assume the risk associated with investing. Defined benefit plans are good options for older employees and long-service employees.
Defined benefit plans are more complex, subject to special ERISA requirements, and it is more difficult to explain the value of a future benefit to employees.
Profit-Sharing Plans
A profit-sharing plan is a defined contribution plan in which the employer makes annual contributions to each participant´s account. The employer contribution is determined either by a formula based on profits or it can be entirely discretionary on the part of the employer.
Allocation of the contribution to participant accounts is often based solely on a combination of compensation, length of employment or age.
In a typical profit-sharing plan, employees are in charge of making investment decisions and bear the investment risk. The risks associated with managing an account balance during retirement and possibly outliving the assets are disadvantages.
Pension Equity Plans
A pension equity plan is a defined benefit plan. The benefits in a pension equity plan are defined as an accumulation of present values rather than an annuity payable at a future retirement date. The lump sum benefit at retirement, termination, death or disability is the product of the points (present values) multiplied by final average salary. The points are calculated taking into account age, service, and/or compensation and can take into account Social Security benefits.
Pension Equity Plans are typically attractive to early and mid-career employees because the plan formula builds up evenly throughout an employee´s career. This is in contrast to a traditional defined benefit plan where value builds very slowly early in an employee´s career, and very rapidly at the end.