Deferred Compensation
Example Title
Deferred compensation can include timelines for access earlier than typical qualified plans ie; 59 ½ years old. These types of plans can incentivize chosen employees thereby keeping great talent from resigning to go to the continuous outside job offers they see every day. Key employees will leave for small increases in current income offered by competitors if they do not feel appreciated. All employees enjoy being recognized and they see attractive job opportunities everyday on LinkedIn. Business owners need plan designs that can alleviate these constant concerns about losing key employees.
Employees themselves can also elect to defer what would be taxable earned income in a given year to a later year when tax rates may be less or the tax bracket is lower due to lower income totals in future years. Although deferred compensation plans are popular and attractive there are numerous compliance concerns that must be met to prevent a business from getting into trouble with the DOL and ERISA. Thompson Planning Group can supply the guidance necessary and can assist with the proper implementation of these unique opportunities.
Reward/Retention Strategies
Continuity and Exit Planning
Business continuity and exit plans. For the private companies in United States there are really only three exit plans business owners will take. If things go well and no negative life events, like the loss of partner or loss of owner, occur the three exits would be
1) A sale to 3rd party, outside buyer,
2) An inside transfer of ownership to the next generation or a key employee group or
3) The third exit would be the owner never sells the company or transfers the company stock and dies without ever transferring the business. The earlier a business owner prepares it provides the most sale price for the company. With strategic planning, the owner is able to transfer the company to who they want, when they want, and for the value that they want. We at Thompson Planning Group build strategies that address all three of these exit paths including the unanticipated exit by the loss of a partner or key employee. We see many buy-sale plan designs that address these events but are not tax efficient and will not produce optimal outcomes. Millions can be lost if a buy-sell arrangement is not designed properly and capital gains taxes can be extreme.