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NonQualified Benefit Plan Examples An ERISA Excess Plan refers more to a defined benefit or defined contribution plan; both plans are explained below. Regarding these plans, the employer makes contributions to a pension plan as opposed to the employee contributing salary dollars in a 401(k) account. Each plan type has certain limitations attached that exist for high-salaried executives. An ERISA Excess Plan gets an executive beyond those limitations. Defined Benefit Plan Defined Benefit Plans are employer-sponsored retirement plans for which retirement benefits are based on a formula indicating the exact benefit that one can expect upon retiring. Investment risk and portfolio management are entirely under the control of the company. There are restrictions on when and how these funds are withdrawn without penalties. Defined Contribution Plan A Defined Contribution Plan is a retirement plan wherein a certain amount or percentage of money is set aside each year for the benefit of the employee. There are restrictions as to when and how one can withdraw these funds without penalties. Both Defined Benefit and a Defined Contribution Plans work well under qualified benefit plans. But, for companies wanting to offer stronger benefit options for a select group of high-salaried or key employees, or, want a more competitive employment offering to attract, retain and reward key executive talent, an ERISA Excess Plan can offer companies a cost-effective benefit plan solution. Contact Bank Consulting Group today to discuss new ideas and options in enhancing your company's pension plans so that they are more inline with your goals and company objectives.
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