RETENTION & RETIREMENT

SERPs

• SERPs
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• Deferred Comp (457(f))
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• Bonus & Incentive Plans

Security in retirement is an appealing enticement to senior executives your credit union wishes to retain or recruit. By establishing a Supplemental Executive Retirement Plan (SERP) for selected executives, DHA can help your credit union secure an appealing senior management team. This non-qualified deferred compensation agreement can provide retirement income to select executives in return for the attainment of agreed-upon objectives, such as a specified number of years of service until retirement.

The most balanced and beneficial SERP structure for both the credit union and the executive is to use a split-dollar life insurance policy and/or an annuity, owned by both the credit union and the executive and designed to provide a tax-free payout to the executive's beneficiaries in the event of a pre-retirement death. A credit-union-owned annuity provides tax-deferred growth of investments until the executive retires and may be used to provide a life-long stream of income or a lump sum payment. By properly structuring a SERP, both the credit union and the executive realize the benefits.

What are the Advantages of Using a SERP/457(f)?

• The plan improves retention by rewarding executives retained for a specific number of years or until retirement. (Golden Handcuffs)
• The plan enables the credit union to follow its succession plan in a timely manner by allowing its executives to retire at appropriate ages. (Golden Parachute)
• The plan is an excellent tool for the credit union in a competitive employment market for attracting and retaining key executives.
• The plan is selective and non-qualified, allowing the credit union to choose and reward key executives without restrictions on contribution amounts. Regulatory oversight or testing is not required. Plan reporting is minimal.
• The credit union controls the plan, owns the plan policies and carries the cash value as an asset on its balance sheet.
• The plan's cash value accumulates on a tax-deferred basis.
• The plan can be structured so the credit union can recover associated costs.
• The credit union's costs and the unknown liabilities of a self-funded approach are more clearly defined and minimized.
• Variable annuities offer a choice of investment management styles within the same contract. The investor gets the benefit, cost savings and talent of institutional money management. This includes asset allocation, automatic rebalancing, and fund exchanges, without fees or taxes.
• Unlike mutual funds, there are insurance products that guarantee the credit union's principal and/or return on investment.

For more information, please call Debbie Hilton at 800.367.0433, ext. 121, or e-mail recruit@dhilton.com.