Retirement Plans and Executive Benefits for Nonprofits

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Retirement Plans and Executive Benefits for
Nonprofits

• Presented by
• Joseph F. DeNoyior, CLU

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Goals of Effective Benefit Planning

• Attract Quality Employees
• Retain Valuable Employees
• Avoid Moral / Social Decisions
• Compete with For-Profit Companies

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Level I Basic Employee Benefits

• Comprehensive Health Insurance
• Group Life, STD, LTD (Fully Insured)
• Dental Insurance
• Section 125 Cafeteria Plans

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Level I Basic Employee Benefits

• Qualified Retirement Plans
• Defined Contribution Plans
• 401(k) or 403(b)
• 401(a), money purchase plans, profit sharing
  plans
• Defined Benefit Plans

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Why 403(b)?

• 403(b) vs. 401k
• All the benefits with fewer hassles and cleaner
  administration, just as easy to set-up
• No outside audit requirement
• No top heavy minimum contribution
• No determination letter
• Much simpler 5500
• Lower fees in many cases
• No ADP test
• Does have ACP test if employer contributions are
  made

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403(b) Plan Features

• No deferral percentage test required
• Easy to file 5500
• No numbers are on it
• No annual outside audit

• Trustee-to-Trustee transfers allowed
• Plans cannot impose age or service requirements
  as it relates to deferrals
• All non-excludable employees must be permitted to
  make elective deferrals in excess of 200

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403(b) Plan Features Continued

• Rollovers
• Yes, need to satisfy distribution requirements
  which are the same as 401(a)
• Elective deferrals
• 14,000 2005
• 15,000 2006
• Total amount may not exceed the lesser or 100
  of participants salary or 42,000 for 2005.
  (44,000 for 2006)

• Age 50 Catch-up contributions
• 4,000 in 2005
• 5,000 in 2006
• 500 incremental increases in catch-up
  contributions per year after 2006
• 403(b) loans
• Plan participants can borrow from their account
  up to the time they retire
• The loan can be taken for any reason
• As the loan is repaid the interest and principal
  are reinvested back into the participants 403(b)
  account.

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Level II Additional Employee Benefits

• Employee Assistance Programs (EAP)
• Travel Assistance Program
• Voluntary Long Term Care Insurance
• Voluntary Individual Disability Insurance
• Other Voluntary Benefits
• Accident Policies, Cancer Insurance, Hospital
  Intensive Care
• Wellness Programs

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Level III Executive Benefits

• Must Take into consideration
• Reasonable Compensation
• (the entire compensation package)

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Level III Executive Benefits

• Enhanced Benefits- Health Insurance
• Individual Disability Income Insurance
• DI Wrap Programs (Employer Paid)
• Retirement Plan Contribution Protection
• Long Term Care Insurance
• Individual Policy (10-Pay Contracts)

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Level III Executive Benefits

• Non-Qualified Plans
• Executive Bonus Group Term Carve-Out
• Supplemental Executive Retirement Plans
• Section 162 Bonus Plans
• Individual Financial Planning

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Level III Executive Benefits

• Deferred Compensation Plans
• 457(b)
• 457(f)

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457(f) Retirement Plan

• Opportunity to defer compensation in excess of
  qualified retirement 457(b) plan limits
• No contribution limits
• Earnings accumulate tax-deferred (until
  qualifying event)
• Employer match or contributions limits lost due
  to IRS restrictions in qualified plans can be
  restored
• Organization can make discretionary incentive
  contributions

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457(f) Retirement Plan

• Assets remain an asset on balance sheet
• Select group of management or HCEs
• Can be based on Defined Benefit or Defined
  Contribution
• Cost Recovery available
• Subject to creditors of organization
• Risk of forfeiture must be real

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Questions?

• Joseph F. DeNoyior, CLU
• 703-847-4321