Survey: NonQual Plans Alive and Well

According to a study of 2002 proxy data from 1,993 companies with revenue of more than $250 million, 98% offered a DB or DC plan to employees and 71% likewise featured a nonqualfied plan(s) as well, according to a study conducted by The Todd Organization, a national executive benefits consulting firm. Larger firms were more likely to have a nonqualified plan on their benefits menu, the study said.

The Todd Organization research also found that 96% of companies that offer an executive deferred compensation program also offer a 401(k) plan, while 84% of companies that feature a supplemental executive retirement plan (SERP) also provide a defined benefit pension plan.

Nonqualified, supplemental retirement plans usually are implemented to help companies attract and retain high quality executives and other key employees. Because these employees face significant limits on what they can contribute to, and receive from qualified retirement plans, supplemental, nonqualified plans usually serve as a retirement planning bridge.

Nonqualified plans typically have been designed so that executives will receive the same percentage of pre-retirement income from qualified and nonqualified plans as other employees are able to receive from qualified plans alone. Companies often look to have their nonqualified plan be an extension of their 401(k) and/or pension plan.