Arkansas Supplemental Executive Retirement Plan - SERP

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Control #:
US-CC-24-260
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This sample form, a detailed Supplemental Executive Retirement Plan (SERP) document, is a model for use in corporate matters. The language is easily adapted to fit your specific circumstances. Available in several standard formats.

The Arkansas Supplemental Executive Retirement Plan (SERP) refers to a specialized retirement benefit offered to high-ranking executives or key employees in Arkansas. It is designed to provide additional compensation beyond their regular retirement benefits, ensuring a secure and rewarding retirement. The Arkansas SERP acts as an incentive for executives and valuable staff members to remain committed to an organization for an extended period. It offers a way for companies to attract and retain top talent while offering financial security and motivation to key personnel. Keywords: Arkansas, Supplemental Executive Retirement Plan, SERP, retirement benefit, compensation, secure retirement, high-ranking executives, key employees, additional compensation, regular retirement benefits, commitment, organization, top talent, financial security, motivation. Types of Arkansas Supplemental Executive Retirement Plan (SERP): 1. Defined Benefit SERP: This type of Arkansas SERP guarantees a specific retirement benefit amount to participating executives based on a predetermined formula. Factors such as years of service, average annual compensation, and retirement age are considered to calculate the final benefits. 2. Cash Balance SERP: In contrast to the defined benefit plan, the cash balance SERP involves setting up hypothetical individual accounts for participating executives. These accounts are credited with a specified percentage of the executive's annual compensation plus an interest rate. The executive receives the accumulated amount upon retirement, which can be taken as a lump sum or converted into an annuity. 3. Deferred Compensation SERP: This type of SERP allows the executive to defer a portion of their compensation to be received in the future, typically during retirement. The deferred compensation is invested, earning tax-deferred growth until it is distributed to the executive. It provides flexibility for executives to choose when and how they receive their retirement benefits. 4. Supplemental Savings SERP: In this SERP, employers contribute a certain percentage of an executive's annual salary into a separate retirement savings plan. The employer's contribution may be matched based on specific criteria, such as years of service or performance targets. This plan allows executives to accumulate additional savings beyond their regular retirement plans. 5. Combination SERP: Some Arkansas organizations may offer a combination of SERP types to provide executives with a comprehensive retirement package. This could involve a defined benefit component, combined with a cash balance or deferred compensation component, tailored to cater to an executive's unique needs and circumstances. In conclusion, the Arkansas Supplemental Executive Retirement Plan (SERP) is a retirement benefit offered to high-ranking executives and key employees, providing additional compensation for a secure and rewarding retirement. Different types of SERP plans, including defined benefit, cash balance, deferred compensation, supplemental savings, and combination plans, offer flexibility and tailored benefits to executives based on their preferences and needs.

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SERPs are paid out as either one lump sum or as a series of set payments from an annuity, with different tax implications for each method, so choose carefully.

The funds can be withdrawn, without penalty, before you turn 59½, nor do you need to begin required minimum distributions at age 73. Although most employers require distributions to begin at retirement or when you are no longer employed. SERPs can be designed with many different options or configurations.

Although SERPs could be paid out of cash flows or investment funds, most are funded through a cash value life insurance plan. The employer buys the insurance policy, pays the premiums, and has access to its cash value. The employee receives supplemental retirement income paid for through the insurance policy.

A supplemental executive retirement plan is a deferred compensation agreement between the company and the key executive whereby the company agrees to provide supplemental retirement income to the executive and his family if certain pre-agreed eligibility and vesting conditions are met by the executive.

SERP withdrawals are taxed as regular income, but taxes on that income are deferred until you start making withdrawals. Much like other tax-deferred retirement plans, SERP funds grow tax-free until retirement. If you withdraw your SERP funds in a lump sum, you'll pay the taxes at all once.

Example of a SERP Even if the employee quits, the company still has access to the insurance's cash value. If the employee passes away, the company is a beneficiary of the payout and also gets tax benefits.

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Under general accounting principles, organizations need to account for NQDC benefits such as SERPs as a liability on their balance sheet. Typically, ... When paid, the benefits become taxable to the executive as income and tax-deductible to the company. How do Supplemental Executive Retirement Plans Work?Jun 14, 2011 — A SERP is a supplemental executive retirement plan or supplemental executive retention plan ... in or filling in forms. You can set your browser ... Jul 11, 2023 — Discover how to design, implement, and maximize Supplemental Executive Retirement Plans (SERPs). Explore tax implications, benefits and ... Purpose of Plan. The purpose of this Plan is to (i) provide deferred compensation for a “select group of management or highly compensated employees” and (ii) ... A supplemental executive retirement plan is a form of deferred-compensation plan used to reward and retain key executives. Feb 4, 2023 — A SERP is a non-qualified deferred compensation plan offered to a company's key employees, including CEOs, CFOs and high-ranking officials. They ... Specifically, CGS used an incorrect allocable SERP III cost when calculating the indirect cost rates. ALLOCABLE MEDICARE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ... Jan 15, 2020 — A. I am testifying on behalf of The Empire District Electric SERP Retirees (“EDESR”). 11. EDESR ... A supplemental executive retirement plan (SERP) serves as an extension of a company's qualified plan. SERPs may also be initiated as a stand-alone benefit ...

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Arkansas Supplemental Executive Retirement Plan - SERP