Why Use Deferred Comp, When There Is A Better Way?

It wasn’t hot when I picked it up! The phrase had its origin when transactions were made only to find later that the property in question was stolen or illegal goods. The buyer who finds the deal wasn’t what it seemed might say, “It seemed like a good idea at the time!”

Deferred compensation is a deceivingly complicated benefit. An employer grants an employee a contractual right to payment later if conditions are met. The promise doesn’t even need to be funded.

But the stark structural simplicity loses its luster quickly when the realities of implementation and operation set in:

• Administration costs are prohibitive for smaller groups.
• Employer time and accounting and government reporting is burdensome.
• Careless procedures can result in stiff legislative penalties.
• Decline in business environments can make plan fulfillment difficult.
• Business failure can leave plan participants without recourse.

Consider an alternative fringe benefit that:

• Has no administrative maintenance or government involvement.
• Is a deductible expense for the employer.
• Allows each participant to choose among plan benefits including retirement income, disability/chronic illness/long-term care coverage, and death benefit protection.
• Allows for flexibility in year-to-year funding by the employer.
• Incentivizes participants with immediate vesting and portability.
• Does not obligate the employer to future funding.

We will help you design simple and profitable benefit plans for all your business clients who want to attract and keep talented people in their workplace. Call Tom Virkler, JD, Director of Advanced Markets, at (706) 614-3796 or tom@cpsadvancedmarkets.com.

For What It’s Worth: Worthy informal idioms don’t go away. They just continue to prove useful in new circumstances. The most common complaint against online food delivery platforms is that the order was cold upon arrival. Of course, the most common courier excuse: It wasn’t hot when I picked it up!